It’s no secret that aftersales, specifically parts sales, is often labelled as the ‘ugly duckling’ of the automotive world.
I’ve personally heard many a marketing person in the automotive game liken the business of selling parts to that of selling ‘pots and pans’. However, if we go past this rhetoric and scratch the surface of the parts business, the potential for increased profitability becomes immediately obvious.
“You guys in parts wouldn’t exist unless we sold the cars..”
This sentiment flows across many parts of the industry. You only need to compare the budget, resources and infrastructure focused on car sales versus that of parts to see how wide-spread this belief is.
And it’s understandable.
For the longest time, the industry’s bulk profit came directly through car sales. The more units sold, the higher the returns. Service and parts simply tagged along for the ride. The attitude of aftersales as an afterthought instilled throughout those years still remains in the belief system of many today, although the market’s financial reality has shifted greatly. The new reality is that margins for most automotive brands have eroded to the point that many cars are now sold at the tiniest of margins (some even at a loss) with Dealers making their money through manufacturer rebates against target.
With most service departments at near capacity, and older (by older I’m talking as little as 2-3 years) more profitable-to-service cars steering away from dealerships – wholesale/trade parts sales is the beacon of hope for many.
Yes. Selling parts is not as sexy as selling cars.
But let’s be frank; manufacturers and networks that sell their product exist for one reason – to make a profit. Sexy or not, aftersales is a clear area of untapped profitability.
The parts environment offers favourable differences to that of car sales. When it comes to selling parts to the wholesale market, OEM’s do not compete against each other – they actually have a shared charter to compete against the aftermarket (parallel imports, genuine second hand and non-genuine alternatives). What an opportunity!
Moreover, when we’ve asked mechanical and collision repairers what motivates their choice in parts they’ve cited quality of service, the quality of the parts themselves, and parts availability as their top 3 requirements.
Tick, tick and tick!
These opportunities offer significant rewards for those that recognise them.
Whether a brand is experiencing market share gains or losses, wholesale parts sales can make a significant contribution to the bottom line at manufacturer and network levels. Repairers too benefit from offering higher-margin genuine parts to their customers.
So where does one start?
Well, work needs to be done at manufacturer and network levels to ensure alignment for the long term; alignment to improve parts availability, marketing and business support as well as ensuring the parts themselves represent value. At the other side of the spectrum is influence at the coal face. Specifically Dealer parts reps that engage with trade customers each and everyday.
Across the world there are literally millions of customer visits each week – each one representing an opportunity to sell more parts.
This discussion is not limited to just the automotive industry; the commercial industry (trucks, buses and other capital equipment) also faces the same challenges and opportunities.
It is time to place aftersales (specifically wholesale parts sales) at the forefront of our thinking, and for all players in the sales channel to play their part and capitalise.
(Product of RANDEM)