The accessories market is bigger than ever, but dealerships still aren't taking full advantage of it.
From fuzzy dice to satellite navigation, auto accessories are a $40 billion-a-year business — generating more revenue, by some accounts, than collision repair. Profit margins on accessories sales routinely approach 50 percent.
Half of new-vehicle buyers say they plan to customize their purchases, industry surveys suggest. When they do — 6 million new vehicles are accessorized in the first two years of ownership — customers typically spend between $300 and $800. Truck buyers spend $1,500 on average.
Yet only about 5 percent of customers buy add-on accessories from the dealership where they purchased their vehicle, the dealer software provider Reynolds & Reynolds estimates.
As new-vehicle sales and profits stall after years of growth, franchised dealerships in the U.S. must look elsewhere to pick up the revenue slack. Dealerships and automakers have ample opportunities to increase their share of the accessories market, now dominated by aftermarket providers, and to build customer loyalty in the process.
"We've got to do a better job of selling" accessories, says Trevor Gile, managing partner of Motorcars Honda in Cleveland Heights, Ohio. "That'll be the next big movement to capture every penny."
Gile says dealerships must "get the nut cracked" of installing accessories more quickly and efficiently. He is revising his service department's processes to help accomplish that goal, Gile told Fixed Ops Journal.
Mark Seng, global aftermarket practice leader at the data analysis firm IHS Markit, says "dealerships are getting aggressive across the board" about selling accessories, "and OEMs are focusing on the aftermarket, too."
"The dealer is positioned better in the consumer's mind" than independent competitors to provide sophisticated accessories such as electronics, Seng said in an interview at last month's Specialty Equipment Market Association show in Las Vegas. But he adds that it now "takes a much greater level of expertise" to sell accessories successfully.