SEMA News—July 2012
By Chad Simon
A Profitable Partnership
Restylers and Dealers Create a One-Stop Shop for Consumers to Purchase Specialty-Equipment Parts and Accessories
With three retail locations in North Carolina, Truckers Toy Store isn’t 100% dependent on dealerships, making its business better able to carry on when new-car sales slow down.
This seems to indicate a resumption of the longstanding, mutually beneficial business partnership between parts manufacturers, restylers and car dealerships, which had stalled during the recession. That said, there are some differences in the way some restylers do business since the recession, and long-term challenges remain.
Getting in at the Dealer Level
Partnering with car dealers to sell accessories has long been a profitable tactic for restylers, adding sales to their bottom lines and helping to get a foot in the door with new customers, said Ginger Glover, president of Truckers Toy Store based in Morehead City, North Carolina. The question is, how best to do it, and how much is healthy?
“I’m not 100% dependent on dealerships,” Glover said. “It’s nice to have, but for me to build my business solely around their needs—I have no intention of doing that. As with what happened in 2008, lots of folks had their heads handed to them.”
It’s well known that accessorization is an added benefit that helps to sell cars. (See “SEMA Accessorization Study 2010,” available online). Even if dealers have a car that’s not a strong seller, showcasing it on the floor decked out with a brand-new wheel and tire package or the latest technological enhancements might catch the eye of 10 or 15 more potential customers. This increases their chances of getting that elusive sale, and the tactic is an additional point of purchase for parts manufacturers and dealers.
After a vehicle is sold, Glover sends an employee to the dealership, picks up the vehicle, fully dresses it and brings it back to the dealership so the salespeople aren’t off the floor.
“That’s important to them, because they have to leave the floor to take the vehicle to your facility,” Glover said. “They can’t sell anything if they’re off the floor. They may miss the chance to sell that big deal.”
To get involved at the dealer level, Glover suggested building a rapport with the dealership’s general manager and letting the salespeople know you’re there and what you can do for them.
“I liken it to a fishing expedition,” she explained. “You can throw your line in the water, but if you don’t work it, you’re not going to catch anything. Offer up ideas, let them know what you have available and how quickly you can get it and turn it around.”
Help dealerships differentiate themselves by providing products and services not available from the factory.
“We offer an ‘à la carte’ type of arrangement,” Hinton said. “If a dealer needs leather to help sell a vehicle, we can provide that. We also help dealerships move cars by differentiating them. For instance, some cars might come from the factory with two or three interior color choices. We can create two-tone packages with logos and things they just can’t do from the factory.”
Working with dealerships is a completely different business from retail, Hinton explained, so it’s important for restylers to make a commitment and put forth the effort, especially on the sales side, because it doesn’t come automatically.
Another wholesale-to-dealer installer and restyler, Auto Trim Restyling, based in Manchester, Missouri, doesn’t have a retail store, so arranging for specialty-equipment parts to be sold at the dealer level is how it does business.
“I go to market at the dealership,” said Kevin McGowan, the company’s president and self-proclaimed “Ambassador of Aftermarket.” “It’s imperative I have great support from SEMA, the Professional Restylers Organization (PRO) council and product manufacturers to help facilitate sales from the general public through the dealer.”
Current trends tend to vary by customer and vehicle type, but recurring themes for trucks include lifts, rims and tires, followed by leather interiors and chrome packages, according to Glover.
For Hinton, next to leather, the big sellers are sunroofs, mobile video and navigation systems. He said that it’s important for customers to have a comfort level with the installation so that they know they’re not going to get anything inferior to what they would have had from the factory. Therefore, Hinton will not install any part that doesn’t meet or exceed factory specs
Trucks have long been a staple of the accessorization market, and one might assume that truck sales would decline with today’s volatile fuel prices, but that hasn’t been the case, according to Alan Farb, editor of Restyling magazine. True, small cars are selling at a higher rate than they have in a long time due to their fuel efficiency, but there is still pent-up demand for trucks. New-truck shoppers are buying grilles and grille guards, tonneaus, truck caps, toolboxes, racks, bed liners, towing systems and running boards.
Also, pinstriping is on the rebound, since most cars from the factory don’t offer it and because it’s an easy sell and doesn’t take much to make the vehicle “pop,” Farb said. Restylers can take a $7 roll of pinstriping material and wind up with $100 in net profit.
Wheels and tires are still huge sellers, which is something restylers should take advantage of. “Tire dealers sell a high volume of wheels because somebody comes in with a slick car looking for tires and they see a great wheel display,” Farb said.
According to McGowan, information technology is also highly popular in today’s market, especially with the younger generation, though it’s difficult to gauge specific sales in each market because there are so many different types of consumers. However, the more products available to the end consumer, the more they will help dealers sell the car.
“For cost reasons, OEMs can’t design a car with a remote start via an Android or an iPhone, whereas we can go to the dealer, help them put something together and promote it, which might help them sell a car to customers who didn’t know this option was available to them,” McGowan said. “The OEM can’t put a $500 or $600 part on every car; it’s unrealistic for them to spend that kind of money.”
How to Promote Accessorization
One promotion by Auto Trim Restyling featured Vaughn Gittin Jr. drifting at the St. Louis Auto Show.
“Everybody likes to add their own personal touch to a vehicle, regardless of how many bells and whistles it’s already got on it,” said Glover. “I don’t care if it’s a high-end Chevy Tahoe, they’re going to get something done to it.”
Hinton’s sales and marketing team works to develop relationships with sales managers, general managers, owners and service department managers.
“Those are our key connection points at dealerships,” he said. “We also try to establish personal relationships between our salespeople and their individual salespeople and educate them on our product warranties, functionality and options so they have the information they need and will be comfortable selling them effectively.”
Hinton also promotes the company’s products installed on stock vehicles on the showroom floor so that customers can actually touch and learn to operate them.
“It’s an important part of our business to have items displayed,” he said. “Not on a wall necessarily, but in the vehicle so customers can get a feel for what a product does.”
Farb suggested creating a photo book (or using an iPad) to highlight every vehicle you’ve worked on and tailor it to the dealership.
“Dress professionally and, if you’re going to a Ford dealer, don’t drive there in a Chevy,” he said. “Target your market, and make a great presentation for them. You’re going to make your pitch to other salespeople, so you want to make a professional sales presentation to another professional salesperson.”
McGowan has three salespeople on the road to provide dealer sales managers and general managers with training and retail sales support.
“We try to put together unique packages for different dealers and OEMs to find niches or holes in their model lineup,” he said. “We’ll find a niche for one or two of our products that will give the dealer something unique to sell.”
It’s a numbers game—the more people you have promoting the product, the more likely you are to sell it. It’s also about forming partnerships with local dealers and associations to promote the specialty-equipment industry.
“I’ve worked with the local Auto Dealer Association, Ford Advertising Fund and Classic Design Concepts, and we put together an auto show promotion where we had 11 Vaughn Gittin Jr. RTR packages and Gittin Jr. drifting at the St. Louis Auto Show,” McGowan said.
Hitting the Mainstream
Customization isn’t just for enthusiasts anymore, according to Glover. Every customer who buys a vehicle knows that there are certain things they can add on to it. They go into the purchasing process knowing that if they can’t afford a vehicle with the specialty-equipment parts they want, they can always add them later.
Hinton sees a similar pattern, with customization becoming more commonplace and, as a result, customers buying vehicles that are more accessory friendly. They are creating their own packages and designs so that they end up with a vehicle that is customized for them.
“People know what they want because they’ve already experienced it,” Hinton said. “They’ve had cars with sunroofs and leather, or they see emerging technologies with mobile video systems and navigation systems and want to be a part of that. People will not only duplicate what they’ve had in the past but will also step up with some of the more recent technology.”
Farb believes that there are two types of consumers: those who are all about customization—they buy a vehicle with the intention of enhancing it and making it look good; and the majority of people who, after they buy the vehicle, start thinking about customization, especially if they happen to have a savvy salesperson who offers specific parts, such as wheels or lights, depending on the vehicle.
Safety and technology have helped push customization into the mainstream, McGowan said. Also, because of TV shows, such as “Pimp My Ride,” more dealers and restylers are promoting specialty equipment, and customers are becoming more comfortable purchasing parts. Before, they were concerned that a part wouldn’t be as good because it was not a factory piece, but now specialty-equipment parts are much better quality than in years past.
The Economic Effect
Working together with local dealers and associations is one way to promote the specialty-equipment industry. One such promotion featured a Ford Mustang RTR package in which Auto Trim Restyling partnered with its local Auto Dealer Association, the Ford Advertising Fund and Classic Design Concepts.
Specialty-equipment parts sales go hand in hand with car sales, so when car sales dipped in 2008, Hinton also felt the pain.
“But clearly we’ve seen an increase in business now as car sales are picking back up,” he said. “Projections for 2012 look very strong; 2011 was better than 2010, and 2012 looks like it’s going to shape up to be better than 2011.”
Farb also sees reason for optimism moving forward.
“In 2008 when we started to slip into the recession, and 2009, when people were losing their jobs, a lot of people were not accessorizing their vehicles,” he said. “We saw in 2010 and 2011, as the economy slowly started to turn, that people began spending more on accessorization.”
A few years ago, consumers held their trucks longer because they didn’t know where the economy was going, so instead of buying a new one, they invested in the one they already had. Now they are beginning to spend more and save less, according to Farb.
“I was at the recent NTEA Work Truck Show, and there was not one vendor who I talked to who was having a bad year,” Farb said. “They’re all saying that things have improved—dramatically for some.”
According to McGowan, there is some good that comes out of a shaky economy, because the OEMs de-content their vehicles, which keeps pricing down. With high gas prices, consumers may move into smaller cars, but they’re less likely to give up a comfort feature, such as navigation or leather.
Quality and Warranty Concerns
Warranty and liability issues are a source of tension between restylers and OEMs, and better dialog on both sides is necessary to resolve some of the misunderstandings regarding how quality specialty-equipment parts can work in harmony with original equipment. McGowan will not install any part on a vehicle that does not come with a three-year/36,000-mile warranty.
“It can’t look like it was just slapped on the dash,” he said. “We could use some help assuring the major OEMs that there are good, reputable restylers out there. Don’t blanket us all under one umbrella that we’re going to hurt their business.”
For example, aftermarket leather, if done properly by a reputable restyler, adds to a car’s appeal, and the seats are manufactured for cars with airbags, so there should be no liability concerns.
“We need help combatting OEMs who say they won’t finance aftermarket leather interiors because of liability reasons,” McGowan said. “It’s ridiculous.”
But the truth is that dealers need restylers as much as restylers need them, though they will never admit it because then they’d find themselves vulnerable, according to McGowan.
“Dealers can go about their business without having sunroofs, leather or mobile video, but the aftermarket helps them to differentiate themselves, close the deal, take care of the customer and make additional profit,” he said. “A dealer who’s not doing some type of aftermarket business is missing not only the ability to make a sale but also a profit opportunity.”