From SEMA 2016
My annual trek to the November massive SEMA/AAPEX show, 50th anniversary at that, got me all excited when I attended a work session on promoting accessory sales in the franchised dealership. Four knowledgeable and experienced accessory devotees educated a fairly full house of interested parties on a somewhat novel approach to creating much needed additional front-side vehicle gross profit, as well as adding some bucks for parts and service.
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Speaking of the size of SEMA, try 2,400+ exhibitors, 140,000 participants, multiples of educational seminars, 1500 feature vehicles, and representative from some 140 countries – think overwhelming, and that doesn’t include AAPEX with its 2,200 manufacturers located in a second convention venue! The colossal parade of eye-candy lorries lasted some three-plus hours at an open-to-the-public event featured the last evening. At last count the aisles consisted of over 33 miles – 2.7 million square feet to view – think sore tootsies.
This well-versed and prepared panel consisted of Josh Poulson – Auto Additions, a veteran restyler and SEMA member; Rick Ricart – Ricart Automotive – Columbus, Ohio, one of largest Ford dealers in U.S.; Sidney Haider – AddOnAuto, a digital platform for selling accessories; and Zane Clark – SEMA director of education, and an accessory specialist with vast dealership experience. All shared their experiences and expertise freely.
My own experience with hundreds of dealers, including my own franchises, is that accessory sales are mostly an afterthought, and frankly I have yet to witness anyone completely excel at it – although there are rumors that some do exist. Of course, SEMA tells us this market is a microscopic $39 BILLION annually (8% growth last year) with a mere 24 million households accessorizing vehicles. And one has to ask themselves if any effort is worth pursuing when only 49% of polled new vehicle buyers plan to accessorize. And heck, dealers already capture a massive 5% of the market since less than half of them even bother to query a new vehicle buyer about accessories. OK, what the hell is wrong with us?
The gist of this thought-provoking session was how to create a successful accessory sales and installation plan by using an outside source as a “complete” partner, which both supplies and installs accessories at the dealership or at their own facility. This relationship takes the pressure off the dealer in getting items installed in a timely and high-quality fashion, relieves the service operation which is often over-whelmed with customer demands, minimizes the need to stock accessories in parts (which too often never get used), and the gross profit per item can be substantial. I’m listening.
“Of course, SEMA tells us this market is a microscopic $39 BILLION annually (8% growth last year) with a mere 24 million households accessorizing vehicles. And one has to ask themselves if any effort is worth pursuing when only 49% of polled new vehicle buyers plan to accessorize.”
The restyler supplier must be a comprehensive partner with the dealer the group explained, including providing the same warranty or better as the dealer franchise provides, while addressing concerns quickly and efficiently. And the supplier wins, even with less profit per installation, by the shear volume an aggressive dealer can provide. According to Poulson, the restyling suppler of the group, their dealer relationship is so important that when they are shopped for pricing, they push the prospect back to the dealer to keep the relationship a winner for everyone.
He explained that he tries “to put myself in the dealer’s shoes – what are the concerns?, CSI, liability, not only profit. The CSI survey is critical and the restyler must make sure that their employees understand the importance of the quality of the product and the installation. We even pickup and deliver to the dealership.”
According to the collection, having a separate accessory manager is the best program, but the accessories are usually sold by the sales person, who receives a meaningful commission. This manager is responsible for overseeing the relationship with the supplier, scheduling, training the sales force, handling customer issues, and ensuring that everyone is following the program as designed. Restylers should provide training too, utilizing walk around practice as well as coaching. They suggested a “soft” approach to presenting accessories, only after the vehicle purchase price is completed.
Another important piece of the puzzle is using software to manage the installation process, according to software specialist Haider, and most importantly to show the customer how the accessories will look on the vehicle they are purchasing. Software now also calculates payments, which demonstrate what a small amount the accessories add. To supplement this effort, the showroom should always feature multiple vehicles which are already accessorized – a situation I personally don’t see in enough showrooms for unknown reasons.
Haider: Today everything is personalization; we used to buy pre-selected computers at a large retailer now the consumers utilize the retailers who can customize. Sales personnel have to personalize the accessory presentation and determine exactly what the consumer wants, their preferences, and then present the products professionally which helps finalize the decision.
Ricart: We are proactive as part of the sales process before F&I. We put the most popular items on a poster in the service department and we preload vehicles, at least two or three per showroom. We load up a base vehicle and they sell quickly. Everyone wants a unique vehicle for the price they are paying. The accessory manager has to establish desirable packages such as safety, performance, etc.
Clark : The dealers are at a disadvantage if they doesn’t partner with a local restyler. These people are the experts and they absolutely understand what it takes to be successful.
Ricart: Make sure the restyler has the capacity, insurance, and attention to the customer needs. These are often items dealers don’t want to do, because it isn’t our expertise or many don’t have the room and they don’t want to take attention from the service customers. Talk to the employees of the restylers, what’s their morale, do they stay up with the trends and constant changes?
Poulson: Think “trim level economics” – consumers use the Internet find a vehicle – then Chevy says they have to buy the “Limited” version to get the items they want or need. We explain to the dealers that they can install the extras the customers want while saving the customer thousands of dollars. Trim levels have been reduced by the factories over the years. We study the difference in trim offerings and have the dealer focus on providing the upgrades the customers want.
Ricart: For example we put our “Winter Package” on all of our Hyundai products. (remote start – heated seats – mud guards – floor mats – etc.)
Clark: People want more than they can afford and the dealer can provide much more for less to the customers by adding desired accessories. It sets them apart from other dealers too. Also, SEMA does market research to help dealers know which accessories to feature. We have data on which vehicles are in operation in your area to help you decide what to stock and feature.
Ricart: We have to know the law and what modifications can be made – don’t go to extremes – for example we don’t over-lift a truck. (Note: He drew a large laugh when he said some of the trucks on display at SEMA one could take a shower under!) We also have the customer sign agreements on vehicles which aren’t meant for the street – off-road, drag racing, etc. The Magnuson-Moss Warranty Act protects the consumer so that an Aftermarket part does not void the original warranty. There can be a difference of $10,000 versus $2500 for the customer, and we don’t negotiate the gross profit away.
Ricart: Service advisors must be educated and incentivized. They just need a “cheat sheet” of the main items, not a catalogue. Restylers need to have a relationship with the service advisors too. When customers don’t have the money now, we coach them on purchasing accessories in the coming months, and we get many returns with most purchases in the $400 to $500 range. We average around $350 in accessory sales per truck.
The Aftermarket offers numerous accessories that the factory doesn’t offer but the consumers want. A franchised dealer can be unique in the market area by creating an aggressive accessory offering with the help of local professional restylers, and they should take a large part of the responsibility for success. The reality is that restylers have much more expertise than dealer personnel – not even close in most cases. Once an aggressive accessory sales culture permeates the staffs’ thinking and activities, even the factory offerings increase in sales volume. Dealers can take basic vehicles and enhance them with accessories which satisfy the consumer’s purchasing ability, and more importantly their desire for a vehicle that exactly fits them perfectly – think Social Media postings after the fact!
With the pathetic front gross most dealers are suffering, the decision to investigate a comprehensive relationship with the local restylers has to be a no-brainer as I see it. What have you got to lose? BTW, write me a note if you have any questions – email below.
Author: Ed Kovalchick
Ed Kovalchick is the CEO and founder of Net Profit Inc., Alabaster, AL, an international fixed operation consulting and training firm located in Alabaster AL. Mr. Kovalchick and his firm have assisted hundreds of dealers and manufacturers, and conducted workshops throughout the world for thousands of students since 1979. He has written columns for Dealer Magazine since its inception. Reach him at Ed@NetProfitGroup.com.