3 solutions for accessories revenue share conflicts

One of the biggest challenges dealers face when launching an OE accessory sales program is appropriate pricing so that every department gets a share. Typically a dealership’s parts department charges 25-40% mark up on replacement parts and the service department charge their regular labor rate for install. But, they are typically not replacement parts.

Just like fashion accessories they are often an impulse buy, sold in high volume for lower margins.  In order to remain competitive with the store down the road selling aftermarket accessories should be priced with a 10-15% markup based on brand and value.  Now that they are priced appropriately, revenues may be split between parts, service, and sales.

Easier said than done, right?

Sometimes it’s an all-out brawl to get a parts manager to let go of their coveted 40%. Then you need to convince your sales manager that it is worth his time to offer every single customer floor mats and splash guards. The biggest reason for dealerships selling vehicle personalization is threefold:

1. Meet an existing need of their customer
2. Introduce a new profit center and
3. Increase the dealership’s bottom line as a whole

The shift is not easy to make and is met with some adversity. However, here are three possible solutions to issues dealerships may face when splitting accessory revenue:

Issue 1: Parts Manager Opposition

“This is a bigger hassle than what it’s worth”…sound familiar? Traditionally the Parts Manager stocks replacement parts, assuming that eventually someone will need them. So, they apply the same logic to accessories. But, selling accessories is a volume game.

Solution: Implement an e-catalog that tracks popular “high volume” accessories to stock accordingly, let your vendors carry the cost of low volume inventory and then price to sell. Every department wins, including parts.

Issue 2: Ineffective Communication between Departments

Traditionally parts and sales departments are like the brother and sister that can’t get along. They each track pricing and distribute revenue differently. Neither clearly understands the other…and typically there is quite a bit of friction between the two. Lack of communication and animosity between departments alone can be detrimental to your sales.

Learn more about vehicle personalization sales process for your dealership.

Solution: Implement a shared system with standardized pricing, labor rates, mark ups, installation, revenue, etc. When all departments are on the same page communication is easier trust improves and you’ll operate more efficiently.

Issue 3: Sales Manager Opposition

Sales managers are all about making a profit. Seeing less than a 25% markup generally will cause them to have a “Why push something that I’m not making any money from?” attitude. Unfortunately the sales team will adopt the same philosophy.

Solution: Create an Accessory Manager position. According to the 2011 Automotive Accessory Report the average accessory dollars spent and intended to be spent per new vehicle sold equaled $815. Car sales consultants remain focused on selling cars and the dealership is able to tap into a billion dollar industry with a single accessory sales champion.