LoJack launched its dealer "preferred partner" program, which it calls Overdrive, this year.
From a dealer's perspective, key elements include:
- Stair-step wholesale price reductions, which increase as sales penetration increases.
- One free LoJack unit for every three a dealerships sells during the dealership's first two months in the program;
- An arrangement with some auto lenders under which lenders will finance LoJack units as part of the same finance contract as the vehicle. A LoJack spokesman did not name the lenders but said they include some captive finance companies.
Price cuts and more
In addition to price cuts, the Overdrive program provides dealers with feedback and training to increase sales for individual dealerships, plus head-of-the-line privileges at LoJack's call centers, Weichselbaum said.
"There's a lot more to this than just a program where we would say, for instance, 'Here's fifty bucks off a LoJack.' We are offering an individual analysis for thousands of dealerships. That's a real commitment on our part, and it takes some time," Weichselbaum said.
He wouldn't say precisely how much its dealer incentives are. However, the publicly traded company said its average revenue per unit fell 10 percent in the first quarter from the year-earlier quarter. That implies the wholesale price cuts in the first quarter averaged about 10 percent.
On LoJack's consumer Web site, retail prices start at $695 for the flagship LoJack device.
In interviews last year, the company said its wholesale revenue per unit was in the low- to mid-$200 range. That implies a dealer cost of around $200 to $250 and a dealer margin at full retail price of about $450 to $500.
Tough competition
The LoJack device is a hidden transmitter. If the car is stolen, the device gets turned on and sends police cars within range a signal.
LoJack is fending off competition from global positioning system-based anti-theft technology. GPS technology has much greater geographic coverage around the country. It's also standard in more and more cars -- unlike LoJack, which is an aftermarket product.
GM's OnStar system, for instance, comes standard on more than 40 GM models for the 2011 model year.
The LoJack dealer incentive program is helping sales, said Mark Berman, finance director at Bunnin Chevrolet in Culver City, Calif., in metropolitan Los Angeles.
"Car theft is a big deal in L.A.," he said. Berman said the dealership's LoJack sales penetration for both new and used cars is around 15 to 20 percent.
Since the recession, LoJack has been fighting to regain consistent profitability. In the first quarter, U.S. sales were up, but the company lost money in part because of lower prices. It made a profit in the fourth quarter but lost money overall for 2010.
It's a trade-off
LoJack, of Westwood, Mass., said that in the first quarter, total revenues from the sale of LoJack units dropped about 3 percent to about $13.3 million, but the number of units sold increased 7 percent. LoJack didn't report unit sales for the quarter.
LoJack said 87 percent of its U.S. sales are though dealerships. Most sales are through franchised new-car dealerships, including the used-car department of franchised new-car dealerships, Weichselbaum said. The LoJack distribution network also includes independent used-car dealers.
LoJack isn't sold nationwide. It's sold in 28 states and the District of Columbia, concentrated in the biggest U.S. markets.
Weichselbaum said LoJack sells its products through "thousands" of dealerships, but wouldn't elaborate. He said "hundreds" have signed up for the Overdrive dealer incentive program.
