Auto manufacturers are working with their dealers to get a bigger piece of the accessories market. More sales of factory parts and accessories improve manufacturer and dealer profitability and give retailers a hedge against dipping new-vehicle margins.
It's easier said than done, however. Franchised new-car dealers hold just 10.5% of the $6.8 billion accessories market, according to most recent figures from the Specialty Equipment Market Association(SEMA).
Manufacturers are getting dealers to use software on the showroom floor that tracks inventory on the Internet and allows customers to see what their vehicles will look like adorned with accessories
Dealers also are amending the sales process and sometimes using outside installers to take the burden off service departments.
"We made it difficult (for dealers to excel in the accessories market in the past) with inventory and scheduling," says Kathleen Merchak, global accessories commodities manager for the Ford Customer Service Division.
"If they don't have the product in stock, they'll lose the customer to the aftermarket. Or if they can't install the product in a way convenient for the customer, they'll lose the customer. Another problem is the service department's days are planned so spot deliveries are tough."
Putting accessories on vehicles before they reach the showroom, Stan Kujawa, owner of Findlay Ford in Findlay, OH, eliminates the problem of service department scheduling.
"We have 10 to 20 vehicles on the lot that are fully accessorized," says Mr. Kujawa. "And believe me, those vehicles sell first."
Ford is attempting to remove those obstacles by utilizing Ford Authorized Distributors as authorized installers of accessories.
"They're already servicing the dealers several times a day since they are the source of Motorcraft parts and Ford remanufactured parts," says Ms. Merchak. "We're leveraging an existing distributor channel that is invisible to the customer."
This set up promises either same-day or next-day pickup and keeps the dealer from having to stock accessories inventory.
Ford expects this program will help its dealers improve its $250 million in annual accessories sales. In the pilot, Ms. Merchak says, dealers saw incremental increases from 20% for those who already did well with accessories, to 80% for those who weren't in the business before.
Dealers in Ford's top 66 markets will be using the authorized installers by the end of the year. The balance of the retailers will convert by the second quarter of 2000.
"I think we still have a long way to go," says Mitchell Dale, principal at McRee Ford in Dickinson, TX. "The quality of the parts is good, but we're not competitive with pricing and we've got to be able to access the product in 24 hours."
Mr. Dale says, however, that Ford's accessories push is a good idea and "makes a lot of sense."
Starting in January, Ford dealers will have a system called Ford Macro available to help with accessory sales.
Ford Macro is a PC-based software program that allows customers to see their vehicles with the accessories they have in mind.
There are several ways dealers can use this system.
One way is to put another step in the sales process. That step would be a visit to an aftermarket specialist who shows customers what is available using Ford Macro. Another is for each salesperson to have the system at his or her desk.
"There are six different process models for various sized dealerships," says Ms. Merchak. "It's very flexible."
"You really have to show the customer what the accessories look like on the vehicle," says Mr. Kujawa. "A picture doesn't do it justice, but Ford Macro will help because in trucks alone we have 50 to 60 different accessories."
Early next year, DaimlerChrysler dealers also will have a PC-based showroom accessories sales tool that takes integration to the next level.
Not only will the system allow customers to see what their vehicles will look like with the desired accessories, but it will help the dealership acquire the parts.
"We deliver every day from 15 parts distribution centers nationwide," says Rich Rae, director of sales and marketing for DC's Mopar Division. "Next-day is the normal availability of parts."
Getting DaimlerChrysler's accessories sales to a league-leading $400 million per year has taken years, says Mr. Rae.
"We started before anyone else did, in 1992, with the Grand Cherokee," he explains. "We worked directly with the platform engineering group not only to make sure those parts fit properly and accentuated the vehicle, but were engineered into the vehicle. They are not an afterthought at DaimlerChrysler."
Showroom displays were initiated in 1995 to create passive customer aware-ness of Mopar accessories. Currently 2,000 of DC's 4,500 dealers have Mopar product displays in the showroom.
Mopar's web site debuted in 1996. By mid-2000, it will be updated to include a "Get a Quote" component for parts, mimicking the vehicle "Get a Quote" area on DC's web site. The system also will direct the customer to the nearest dealer who has the part available.
In 1997, Mopar talked to its best dealers and discovered that significant accessories sales require a total dealership process.
"We captured the best practices and distributed the results to all of our dealers," says Mr. Rae. "The parts, service, new-car and finance departments need to work in partnership."
The better dealers share the wealth between all departments, says Glenn Heller, marketing manager for accessories and electronics at GM Service Parts Operations.
He says, "We want to get the sales, service and parts departments all working together. The key is for dealers to look around the market at the competition and make their prices competitive."
In other words, if a dealership service manager charges too much for installation and the parts manager charges a 60% mark up for accessories, would-be customers may head down the street to a more reasonably priced independent accessories store.
GM SPO initiated "Plan to Win" in 1994. The goal is a 30% increase in its share of accessories applicable to GM vehicles.
Although Mr. Heller declines to say how far GM dealers had to go to reach their goal, he pegs their annual accessories sales were "in excess of $250 million."
The plan, which acknowledges that accessories are an extension of the brand, has several missions. It's basically having the right accessories at the right time at the right price and helping dealerships improve the selling process through teamwork between the departments.
GM SPO, which has an "accessorizer" on its web site, is updating the program for showroom use. A customer will be able to spec out a vehicle on a kiosk, make a printout and show it to the salesman.
The steady increase in light-truck sales by dealers has caused a corresponding increase in accessories sales.
Research shows that truck buyers spend an average of $300 accessorizing their vehicles at the time of purchase. In contrast, car buyers spend about half that customizing their purchases.
"Trucks have been a tremendous boom to our accessories business," says Rich Rae, director of sales and marketing at Mopar.
But while truck buyers on average spend $300 on accessories at the time of the purchase, they ultimately spend a total of $800 putting accessories on their vehicles. That additional $500 is usually spent somewhere other than at a dealership.
Stan Kujawa of Findlay Ford in Findlay, OH, says by equipping trucks with accessories in the showroom, he can keep those dollars within the dealership.
"Most truck customers already plan to go accessories shopping," explains Mr. Kujawa. "We make sure they do it here."
