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THE ULTIMATE DESTINATION FOR AUTO PARTS ECOMMERCE TIPS AND TRENDS

What the Industry Slowdown Means for your Parts Department

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With all this news about a 2017 slowdown for new vehicle sales, it's been a nearly impossible topic to miss!

We don’t think it’s a point for instant panic, since after so many years of growth, the market was bound to level out at some point. But we think it’s smart to know about these trends and adjust tactics at your dealership accordingly.

How will the parts department be affected? Based on past data, we have a few guesses…

As many of you will remember, the 2008-2009 recession hit the auto market hard. We don’t expect things to get nearly as bad, but luckily we learned a lot during those dark years and it may be time to put those tactics back into action.

Looking for a more in-depth and stat driven version of this article? Download a free copy of the ebook.

 

1. More Pre-Owned Car Sales

People still need to drive to work, the grocery store, school, and so on. A drop in new car sales doesn’t necessarily mean a drop in sales overall. In 2008, shoppers decided to save some money by choosing a used vehicle over a new one.

As far as manufacturer incentives for selling new vehicles, this is bad news for your dealership. But you can’t control the market, so sometimes you have to adapt in order to keep dealership profits healthy.

When done right, pre-owned vehicles can actually lead to more loyal customers and better long-term profits.

After all, a pre-owned car is probably older, and will probably need repairs sooner than a brand new car… meaning a prime opportunity for your parts and service team in the months and years to come.

 

What it means for the Parts Department

As you probably already know, front end gross isn't the only way to improve profit on used car sales. Sometimes it's worth it to play the long game and accept a lower gross cost...or sometimes even sell at a slight loss!

Sometimes dealerships try to spruce up the pre-owned car as much as possible so they can sell the vehicle at a higher price. And while it’s still absolutely essential to make sure a vehicle is safe and operational before you put it up for sale, you don’t have to replace every single part with wear. Accepting a lower gross cost can open up opportunities for your parts & service teams to win long-term customers that are worth far more in the long run.

RELATED: 5 Customer Service Fails that are Driving Away Customers

Remember, these shoppers are looking for a lower price. That’s why they’re buying pre-owned instead of new!

You can take advantage of that by only replacing what’s absolutely necessary. Document which parts will need replacement in the future.

When the customer chooses the pre-owned car they want, that’s when you’re honest about the repairs you made. You can tell them which parts weren’t replaced but will need to be in a year or a few months. This way, the shopper can decide if they want to pay the extra now or come back later for the repairs. vAuto has some great tips on used car reconditioning – Check them out here.

You may even be able to create a strategy around this. Right around the mile mark where you expect a part to wear out, shoot them an email with the right offer or discount. This will require some software or documentation, but they're also sales that are ripe for the taking. 

The dealership may end the day with a slightly lower sales number, but the long-term benefit of a loyal visitor is, without a doubt, worth it.

 

Discover why smart dealerships are investing in Fixed Ops

 

2. Older Cars on the Road

When financial times got a bit rough, consumers decided their cars still had some miles on them and kept driving instead of upgrading to a new vehicle. Alternatively, shoppers were buying used cars instead of brand new ones.

It led to more older cars in the road – about 11 years old on average!

After all, if the car still works, why replace it? This kind of thinking saved your customers some money, but hurt the dealership’s new vehicle sales.

 

What it means for the Parts Department

As cars grow older, they start needing more service. Parts that normally aren’t replaced until 5 or 6 years on the road suddenly become golden nugget opportunities for your parts & service team.

Part of this is making sure your team is properly trained! If an older car rolls into your dealership for a standard oil change, how much emphasis do you put on checking the vehicle for other problems?

Work with the service team to communicate with these customers. Even if they refuse service, give them a business card so that they have someone to contact if they change their mind.

This is also a chance to invite them to your parts website, if you have one. Sometimes shoppers refused needed service because they plan to buy the part online and make the repair in their own garage. You can still save the sale by being the one to sell them the part they need!

 

RELATED: 4 Common Myths about Selling Parts Online

 

3. DIY Demand for Parts

With the rise of the internet, information is EVERYWHERE these days. How to install certain auto parts is no exception.

When financial times get tough, people look for ways to cut down their costs. One of those ways through the Do-It-Yourself attitude of people deciding they can paint their own house, install their own TV wall-mount, and fix their own car.

Even without financial hardship, plenty of people want to try their hand at it and learn a new skill, since instruction guides are easy to find online.

With just a handful of mechanical knowledge, DIY folks with a bit of determination can find installation guides and help readily available online. They don’t need your dealership’s service department, and that’s bad news for you.

 

What it means for the Parts Department

DIY shoppers never once intended to go to the dealership service team for help. That means your service team is doomed to lose the sale, and there’s no point in wasting time over that.

But is the sale lost completely?

The DIY shopper may be able to do the service by themselves, but that doesn’t mean they can produce the replacement part out of thin air. But you have those parts on hand, YOU can be the one to provide it.

Having auto parts readily available for order online lets you tap into this market of DIY shoppers and still take a portion of the sale.

Selling on a standalone parts website or a marketplace like Amazon or eBay adds more revenue channels for your dealership, kind of like sticking your fingers in more pies. When one channel wavers, like the dip in service due to a growing DIY movement, then another channel can still contribute and make sure your dealership isn’t left completely pieless.

On a related note, you could also be the one to provide that DIY installation guide that they need. Starting up an auto blog or even a how-to video series can improve your credibility and convince people to shop with you.

 

We still don't think this slow down in sales is any cause for immediate alarm. The market is simply leveling off, as it was bound to do after two years of record sales.

But it's usually to be safe than sorry. Smart dealerships are finding ways to buff up profits in case this slowdown ends up taking a worse turn. It never pays to put all your eggs in the same basket, so to speak, so GMs would be smart to keep holding out for new vehicle sales when the latest trends advise against it.

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