Dealer David Kelleher is such a fan of product bundling, he looks for it in everything he buys.
"I'm the guy who goes to the car wash and pushes 'the works' button," said Kelleher, president of David Dodge-Chrysler-Jeep-Ram in Glen Mills, Pa. "There's a modest discount with each one at each level. That's how I think about bundling."
Bundling is the practice of offering customers a package of products for one price. Dealerships use the strategy to sell customers finance and insurance products, particularly those that protect a vehicle's appearance.
For example, Kelleher sells a chemical fabric protection product and an exterior paint sealant as a bundle for $699 with a lifetime warranty. He has a 45 percent sales penetration rate on that bundle, mostly with customers who lease, he said.
Bundling has advantages, such as helping dealerships shoehorn more products into a limited menu and providing customers fewer chances to object to pricing for individual items. But it has drawbacks, too.
Experts say the more products included in a bundle, the more claims for repair work a dealer is likely to process. Product piling also can make a bundle so expensive it's unsellable. And some products offer customers better value when sold individually. Finally, while a bundle gives the dealership some lift from the sale of additional products, it also results in F&I managers having more to explain in the presentation, requiring more homework for them and extending the time the customer has to spend in the dealership.