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You're Not Going to Like This, But...


7/1/2003
By Brian Cruickshank

What percentage of your customers' overall parts purchases are through dealerships? You're not going to like the answer.
 

Theres an old trial lawyer rule that goes something like this: "Never ask a question you dont know the answer to."

Those are pretty sage words, even in this business. If youre like most people, you tend to ignore answers you dont like. Of course, there is often more value in an answer you dont like rather than one youre comfortable with.

Case in point: One of the highlights at Mays Global Automotive Aftermarket Symposium (GAAS) was a panel discussion that included a shop owner from Tempe, AZ. The shop owner, Mark Salem of Salem Boys Auto, surprised the audience when he announced that he sourced more than half of all his parts from the OE dealer. Half! And this is not a localized trend: Versus 2001 numbers, 2002 parts sales at dealerships were up more than 9 percent for wholesale accounts and nearly 14.5 percent for counter sales. The bottom line: More of your customers are sourcing more parts from dealerships.

Why? Heres what one repair shop owner told me but Ill forewarn you. Youre not going to like what he says. Nevertheless, read his words carefully. The future of your business may very well depend on it.

"The number of OE parts used (by repair shops) will increase because of fit, availability and the fact that some parts are only available from the dealer. There are just certain parts from Ford, Chrysler, GM and the rest that are strictly dealer parts, such as relays, switches and computer pieces. Theyre just not available from the aftermarket. Im sure I source at least 15 or 20 percent of my parts from the OE dealer.

Its both a necessity and a preference. Necessity in the fact that probably half the parts are not available from the aftermarket, and preference because with certain computer parts, I am not happy with the quality of the aftermarket parts. When the parts stores come in and ask me why I am not doing more business with them, I tell them because they don't have what I need.

I have addressed this with several parts stores. Dealers near my shop are selling me much more than they were selling to me two years ago. The bottom line is they are faster. Their service is impressive. Go price wheel bearings for a Chrysler or a Ford at a parts store, and then call the dealer for the same part. They're cheaper, and that's hard to swallow. The dealers have lowered their prices because they are after our business. They lowered prices and deepened discounts. If you are a major customer, they'll lower your percentage rate. They are going after the independent parts stores."

These comments should serve as an eye opener to every store and WD in the market. I ask that you examine your best customers sourcing habits. Find out what percentage of their parts are dealer sourced. I bet it has increased.

We have three big problems that need to be addressed: aftermarket availability of dealer-only parts, price and service. Not all of these (like availability) are in your control, so keep pressure on suppliers so you can remain competitive. There are areas that are under your control, however. Monitor what dealers are doing. Know your competition.

Talk to your customers and ask them to be honest and be prepared to hear some things you dont like. But this time, be prepared to do something about it.













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