In the not-so-distant past, visiting a parts store meant encountering the knowledgeable "parts guru" behind the counter. Armed with an encyclopedic memory of part numbers and an instinctive understanding of automotive repairs, they could swiftly provide the boxes of parts needed for any repair job.
However, as these experts retire, the challenge arises of capturing their vast knowledge and transforming it into a comprehensive database.
Dealerships Best Margins are in Parts and Service.
Parts will normally bring in 4 times the net profit and service 3 times the next profit of equipment sales. Because parts are marked up by a certain percentage above their cost, allowing for higher profit margins. This can vary depending on the types of parts sold, the pricing strategy, and the level of competition.
In addition to this parts departments can generate repeat business from customers that require routine maintenance, repairs, and other services.
Yet despite this less than 20% of dealerships sell parts online!
When a vehicle is five years old it's considered the golden age for parts sales.
With record auto sales for the last five years, and a move towards used vehicles, the maintenance-service and aftermarket-parts profit pool is set to make record breaking sales. Dealerships should be looking for ways to create a seamless, online experience along the entire vehicle purchase, ownership, and resell of the vehicle to create stickiness and build a bond between the car owner and the dealership.
Not only do Dealerships need to rethink the way they sell, show, and interact with the customer online but they should also expand their online presence into maintenance parts to increase the connection with the client, expand their online presence, increase the value of their website to both the dealership and the customer, make more money, strengthen their relationship with their customers and to prepare for the electric vehicles they should also expand into collision services and crash parts to offer customers a one-stop shop for vehicle sales, service, and collision repair.
The dealership website should put all available customer data at the fingertips of the sales consultants, including prior transactions and service histories, insights into demographic elements, and so on, to enable a highly customized sales interaction.
And the data that the dealership website collects should be used to reach out to potential clients as well as find more potential clients through email and social media marketing.
Online disruptors are just getting started and as they begin to disrupt every profitable line of income the dealerships have, customer expectations will begin to rise. It is no longer enough for dealerships to just post their inventory online and hope for the best.
Dealerships need to build websites that engage customers on both the website as well as the social channels. They need to create e-commerce solutions that allow customers to dig so deeply into their offers online so there is no need to come into the dealership.
Dealers also need to rethink how they collect, measure, and spend their marketing budget to better understand, measure, and track lead count, lead quality, conversion, and customer insights.
Aftermarket parts sales will become as important to the dealerships as financing was 20 years ago.
Because dealerships have OEM brand parts and the warranty market it puts the dealerships in a unique position to launch their own independent, aftermarket, in-house, white-label, brands to lure in new clients who are not just warranty customers and build a stronger relationship with their warranty customers.
To participate in the aftermarket parts gold rush dealerships will need a seamless online parts-ordering and logistics experience.
As businesses and communities face instability, companies will struggle to stay afloat, and consumers will begin to tighten their belts, as they start looking for more affordable options to keep their vehicles on the road.
They will be looking for the best, cheapest, most dependable, and easiest-to-maintain vehicles.
What you want to do is go beyond just comparing the costs of vehicles – and on to the availability, price, and expense associated with replacing and maintaining the parts for the vehicle. It becomes about finding the best deals on the most dependable, reliable, and easiest to parts to keep your vehicle on the road and running smoothly.
Dealerships that Don’t Sell Parts Online Lose Money to the Ones that Do!
- Amazon sold $70M in outdoor power equipment replacement parts in 2017.
- A Tractor Supply Co, showed up on the Fortune 500 list in 2019 with $8.35 billion in commerce sales.
- Justin Akin, owner of All Star Dodge Chrysler Jeep Ram sold $4.1 million in online parts sales in 2021.
- Dallas Dodge $363K a month.
- Classic Muscle $69,871 a month in online parts sales.
As more and more dealerships start to wake up to the need for online parts sales, those that don’t will get left behind.
New Online Players are Dominating Used Car and Motorcycle Sales!
New players have shown up in every country, dominating used car and motorcycle sales and the one thing they all have in common, is the majority do not have any inventory of their own.
This is a platform war and the ones with the better platforms are winning.
And the average dealership’s websites are full of code bloat, errors, bad practices, and take nearly a minute to load. If dealerships don’t wake up they will become extinct.