Service & PartsCommentary & Insights

Service & Parts
Mobile Shopping is Impacting Online Parts Sales

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For millions of people, shopping online has become the preferred method, especially over the past two years since the start of the pandemic. However, just because things have begun to look more normal doesn’t mean people are giving up their shopping habits. The rise in online purchases across all retail industries has caused many retailers to pivot their strategy to a fully optimized buying experience. This pivot has not escaped the automotive industry as new franchised dealers turn to eCommerce to drive additional revenue. However, recent data also shows that if dealers want to maximize online efforts, they need to keep the mobile experience in mind.   Don’t Ignore The Data A recent report from  RevolutionParts  that looked at the shopping behavior of over 100 million online parts shoppers showed that nearly 59% of consumers shopped for parts through a mobile device, marking a nearly 5% increase in mobile shoppers from 2020. Mobile users spent an average of $168 in parts orders and made up a little over $204k in total revenue for dealers signed up with RevolutionParts in 2021.  Not only were more shoppers searching for parts through mobile, but they were also purchasing more often, with 1.2k transactions made through mobile compared to 1.1k transactions made through desktop.  Although in 2020, we saw more shoppers searching for parts using mobile. However, 2021 marked the first year more consumers completed their purchases through mobile devices. What Does This Mean For the Parts Department? The dealership’s online parts business needs to be mobile-friendly. This rise in mobile purchases means dealerships will have to include mobile shopping in their online parts strategy and understand their customer’s mobile shopping experience.  Building an online parts business where the mobile experience is lacking will cost the parts department sales. Ignoring the data in the report mentioned above could lead to losing half of the department’s potential online sales. To ensure customers have the best online shopping experience when shopping from their mobile device, you need to make sure that the mobile version of the parts web store meets specific criteria. Otherwise, when a customer lands on the parts website, they may not know how to navigate the site to find what they are looking for, or they may have difficulty inputting their information and checking out. A poorly made mobile version can also confuse mobile shoppers, especially if it is visually unappealing, the text is difficult to read, or links don’t work. When building an online parts business, there are certain qualities you want from the mobile version of the website:  -       Easy to navigate  -       Quick load time -       Text is easy to read -       Visually appealing on a small screen -       Links are easily clickable -       Forms are easy to fill out Ensuring an online parts store is mobile-friendly is a must. A mobile-friendly parts site with these qualities is more likely to increase parts sales and deliver higher customer satisfaction.  Mobile shopping isn’t the future of shopping; it’s already here and growing. If the parts department wants to build a successful online parts business and capture more sales, the data shows that implementing a mobile-friendly shopping experience is a must. Get the Full 2022 eCommerce Shopper Behavior Report The RevolutionParts  2022 eCommerce Shopper Behavior Report  gives parts sellers insight into the behavior online auto parts customers, devices they shop from, how much they are spending, and demographics. To view the full report, visit: https://www.revolutionparts.com/  
Supply Chain Issues and Inventory Challenges For Franchised New Car Dealers

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The automotive industry has experienced a variety of challenges since the beginning of the pandemic, and with ongoing supply chain issues impacting inventory, OEMs and dealers are encountering new obstacles at every level.  New Vehicle Inventory Challenges The current supply chain issues are limiting the amount of new vehicle inventory produced and supplied to dealers. As every dealer knows, this leads to low availability of new vehicles, high prices on new and old vehicles, and a rise in older vehicles remaining on the road.  Issues in the supply chain are also leading to mass amounts of unfinished vehicles being produced and waiting on chips. To combat this, some manufacturers have decided to produce and sell, at a discount, “unfinished” vehicles, with the idea that dealers can install the missing chip components as they become available. Other manufacturers have opted to drop popular features to increase sellable inventory, including rear-climate control, automatic start-stop features, wireless charging, hands-free driving, and HD radios.  For example, according to  Automotive News , Ford will soon begin to ship and sell vehicles missing non-safety-related chips that can be installed at a later date. These missing chips control things like rear-seat heating and air conditioning and auto start-stop features.  With more used cars being sold and some new vehicles being sold “unfinished,” this will mean more, potential dealer-installed options. These missing parts will need to be installed as inventory is available, and older cars will need to be maintained to remain on the road.  The Rise in Used Vehicles Inventory issues are also having an impact on the vehicles currently on the road. Due to the rise in vehicle price and inventory challenges, consumers opt to keep their current vehicles longer or purchase used. This means more used cars are on the road than ever, with the average vehicle age nearing 13-years old. Over time, wear and tear on vehicles lead to more part replacements. They also don’t run as efficiently as newer vehicles and require more maintenance, such as more frequent oil changes. It is estimated that vehicles that are a decade old cost twice as much to repair and maintain yearly than a vehicle that is just five years old. These aging cars represent a great amount of  potential growth the fixed ops side of the dealership as more people will need parts and service as their vehicles age. Roadblocks in Parts Inventory Along with a disruption in new vehicle inventory, there is also a disruption in the supply of automotive parts (more specifically, materials). Dealers and repair shops are struggling to source some of the parts their customers need, resulting in vehicles taking weeks and sometimes months to repair.  The ability to communicate with customers is critical. Be honest with them and let them know if they can expect delay issues on specific parts. If a delay comes up unexpectedly, let the customer know what is happening.  If you are selling parts online, this communication may be easier. Dealers who are selling OEM parts online should be able to have the ability to display what parts they have in stock and which parts they do not. Controlling what inventory a customer can order online prevents customers from ordering an out-of-stock part, lowering order cancellation rates. Currently, many dealers are facing higher cancellation rates due to supply chain issues and inventory shortages. The ability to shop online and expand sourcing options can help alleviate the pressure of getting parts by increasing the odds of finding a part. While your dealership may not have a part in stock, there is a chance that another dealership in the nation may. The ability to go online and shop around for the part can determine how long a car is sitting in a dealership’s service lane.  The same is true for other dealers and repair shops sourcing parts. By creating an online parts business for the dealership, dealers and repair shops nationwide have the ability to source parts from your dealership. Looking Ahead With OEM Parts While not much can currently be done about continuing supply chain issues, OEMs and retailers should focus on providing service to the aging vehicles on the road now, by maintaining OEM replacement parts.  Dealers lack new inventory, and consumers may be hesitant to pay the rising prices; the one thing that remains consistent is the vehicles on the road continue to age. This places more importance on fixed ops and the ability to sell and source parts. To do this efficiently, dealers need to expand their reach by taking their parts business online. By creating an online parts business for your dealership, you become part of a national market with access to millions of more buyers and thousands of more parts sources.       
Changing the Narrative to Sustainable Profit

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Sustainable profit - Profit which everyone benefits from, growth driven by things you become. Unsustainable profit - Where one group benefits at the expense of another, growth driven by things you do. I can vividly remember discussing a car deal with a sales manager and him telling me, “Get all the profit you can, it’s not like they are going to be back to buy another one.” To me, coming from a Ford store in Michigan where most buyers were A-plan and exceptional customer experience is what made loyal customers, this statement hit hard, I could not believe my ears. Years later, after starting my own agency, I considered also starting Unsustainable Business Models Anonymous, I jest. You see, it is not the business model, because no dealership sets out to provide a poor experience for their customers, they just do not have a plan in place not to. The biggest difference in sustainable and unsustainable profit is how we get there. Sustainable profit is growth driven by what we become; unsustainable profit is driven by things we do. One key factor is the view of profit and loss. A sustainable view begins with an action that takes care of everyone from within and grows by influencing others to join. Unsustainable profit represents a pessimistic and single-minded view of life, where the primary goal is survival. Objectification places people in an out-group vs in-group dynamic, where competition exists, hence scarcity. Sustainable businesses have a solid foundation to prove it, they invest in assets that work for them in present and future conditions, allowing them to achieve new objectives. Today’s customers are looking for more than just a functional vehicle. Vehicles and the ownership experience must satisfy other critical needs as well; both physical and emotional. From the moment a customer enters your dealership, you have an opportunity to make an investment in their lives and in return get more than just profit. Sustainable profit is more than just numbers on a sheet. Sustainability is being honest and open with your customers so they can see you as human beings, not just as participants in a transaction. As such, sustainable profit is best realized in the long term by building trust and relationships along the entire lifecycle of a customer. This process begins at that first meeting when that customer enters your dealership and continues until long after the sale. So, where do you start to build a model of sustainable profit? Where can dealerships make investments everyone, including customers, can benefit from? Where results are realized in both the short term and long term. On the sales side, leading with pricing based sale or themed sale is an example of something you do vs something you become. These types of events, while profitable, when not conducted properly are band-aid solutions. For sales, focusing on finding ways to serve your customers in a way which positively impacts their lives, an example, working with a diverse credit group. Investing time and effort in customers with less than perfect credit will grow loyal relationships. You would be amazed at how deeply reliable transportation can impact a person’s life. Benefits of working with a diverse credit group include deepened relationships with your customers, wider market reach, and increased customer satisfaction as reach to meet customer needs. This is an opportunity to increase your sales and serve a greater customer base.  An even greater opportunity lies in Fixed Ops, sorry Sales I still love you! If you want to focus on the long-term sales, Service Advisors are the individuals with the most customer contact, largest impact on CSI, greatest opportunity for gross, and a major factor in whether a customer will return to make a vehicle purchase. Service Advisors are the first, and sometimes only, dealership’s representatives customers have contact with during their time at your location. They are the first impression of a dealership and can create trust through information gathering and interactions that lead to a successful purchase, or distrust that leads to an unsatisfied customer. We have all heard the adage, "Sell the sizzle, not the sausage." I am here to tell you that in most dealerships we have drifted from that process. Customers want value and they want options, so we must pay attention to both needs while interacting with our service customers.  What is a stellar Service Advisor without a solid Technician? Wait, those are in ridiculously high demand you say? Ahhh, yes, so you have an opportunity for an advantage if you are bold. This is going to come down to pay, culture, and resources, not necessarily in that order. When you find a technician with experience, strong training and customer service skills, honesty, and a love for what they do - you have a unicorn. These unicorn technicians are those that go beyond the call of duty, they can be a rock for a team. Not only do they keep your core services running, but a great one is also a living, breathing documentation library on your systems - documenting loose ends and potential pit falls. Find the best techs, unicorns if you can, and do what you can to get and keep them - you will never regret this move. In short, growth driven by serving customers, rather than the customer as your competition. Bring your customers along on your journey, help them grow with you.
Parts eCommerce Fuels Revenue Growth in 2021

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Despite the intense economic challenges and supply issues that occurred during 2020 and 2021, dealers selling parts online with an effective eCommerce strategy continued to see an increase in parts sales. RevolutionParts measured the success of dealers selling through with their eCommerce platform to determine the top trends of digital retail in 2021. RevolutionParts found that the average dealership selling online with their eCommerce tools grew their revenue by 13.4% in 2021, making it their most profitable year yet.    New Car Dealers’ Selling on the RevolutionParts Platform  Online Parts & Accessories Sales Growth, (YoY) Dealer Revenue Continued to Grow Online Despite the challenges presented to dealers over the past two years, online parts sales continued to rise. On average, dealers selling through the RevolutionParts platform generated $38,972 a month, a 13.9% increase over 2020, and the average annual revenue per dealer reached over $600,000, adding massive revenue to their parts department.   This increase in sales comes with a new shift in the way consumers buy parts. Not only are they buying online, but year-over-year, more consumers are buying parts from their mobile devices.  In 2020, most people did their online shopping via desktop. However, in 2021 mobile shopping surpassed desktop purchases for the first time, with 49.3% of people using mobile to make their online purchases, which is an 8.4% increase from 2020. This points to the growing importance of targeting parts buyers on the move with a high-quality, responsive web store and a shopping experience that is also mobile-friendly.  This report shows how important it is for dealers who want to continue to grow their parts business and provide a modern customer experience to sell parts online. Parts buyers are shopping online in high numbers from their desktops and mobile phones. Having a successful parts business means meeting your customers where they are.    Get the Full 2021 eCommerce Year-In-Review Report  The  RevolutionParts 2021 Parts eCommerce Year in Review  provides a look into the performance and top eCommerce trends in 2021, including insights from how and when people are shopping for parts, to the top parts and accessories they are buying. To view the full report, visit:  https://www.revolutionparts.com/ebook/2021-parts-ecommerce-year-in-review/
insurance
Do You Understand the Components of Your Garage Insurance Policy?

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Flavor: Something we crave in our daily routine. Try this flavor-filled description: “There’s a sense of cornmeal next to sawdust, oily vanilla, and a hint of fresh honey sweetness that entices your senses. It takes on a caramel corn sweetness as the vanilla carries you towards sweeter woods and cherry fruits. The end is short and sweet with a distant wisp of orange oils next to a slight minerality.” Recently, I found this depiction in an online article on Uproxx. Do you know what’s being described? (You’ll have to read the whole article or skip to the bottom for the answer.) With an increase in the complexity of flavors, I would proffer that you discover more appreciation of the product through the layers of taste. And so it is with your garage insurance policy. The more you understand it, the more you will appreciate it and have the taste for it.  I recently studied a garage insurance policy for a client. (Try not to be jealous.) I found 107 items in the policy which were questionable and needed further investigation as they were important for the dealer. As it turned out, at least 26 were actionable. My initial review drove the premium down from $109,641 to $81,511. Based on that audit, here are eight (8) select items for you to consider: What is the total value of your land + building + used vehicle inventory (not floor planned) + parts + blue sky? Your liability umbrella should exceed that total number or the business is underinsured in the case of a catastrophic accident. Do you have enough employee crime coverage to satisfy a claim resulting from someone stealing a vehicle? Do you have an aggregate over your vehicle weather deductible to act as a “stop loss” in the event of a large loss? (For example, if you have a $1000 deductible and 600 vehicles are damaged, you are out of pocket $600,000. If you had a $250,000 aggregate, you would write a check for the $250,000 and not the $600,000.) Have you compared your vehicle physical damage coverage limits to your actual inventory to determine if you should adjust the policy up or down? Did you know this exclusion is in most policies? “Loss caused by an ‘employee’ if the ‘employee’ had also committed ‘theft’ or any other dishonest act prior to the effective date of this insurance and you or any of your partners, ‘members’, ‘managers’, officers, directors or trustees, not in collusion with the ‘employee’, learned of such ‘theft’ or dishonest act prior to the Policy Period shown in the Declarations.” How much are you paying for Med Pay coverage? Isn’t it duplicative of your basic liability coverage? If you eliminate the coverage, how much money could you save? Are you paying an extra premium for higher limits on your uninsured and underinsured drivers policy (than you are legally obligated by your state) to pay? How much will this save you? Also, have you considered a separate, higher limit to protect the owners? Are you accurately self-reporting the number of dealer tags? Getting the flavor here? Make it a priority to review your policy with someone knowledgeable who will go through it and explain everything to you. While it may be distasteful upfront, you’ll be glad you did while gaining an understanding of what provisions the policy contains. And, it’s not ice cream that was being described above.  It was bourbon!
connected cars
Dealers Will Soon Have More Choices for Connected Car Services

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Native Connected Car Services Now Coming to Dealerships In past articles , I've touched on the many services that dealers can expect from Connected Car technology. Some of these have included vehicle location, lock/unlock, key management, theft notifications, diagnostics, inventory audits, loaner and demo administration, service reminders, and many more. Together, these services promise to increase dealership productivity and reduce costs, while improving customer satisfaction and retention. Today, Connected Car services for dealers mostly rely on independent third parties, using aftermarket OBD2 plug-in devices for data collection. There are many capable providers offering these dealer-focused connected services. Some good examples of these include Spireon LoJack , Dealerware , and Geotab . But, as I've also mentioned in past posts, vehicles increasingly come equipped by the OEM with built-in telematics systems that can provide the data and commands needed for dealer-focused connected services. And, some service providers are beginning to take advantage of these native connections for a limited range of services, particularly in the management of loaner fleets.  Connexion Telematics and TSD Solutions are offering these connected services, with the support of select OEMs. And finally, some OEMs are now beginning to offer limited dealer-focused connected services directly to dealers – mostly focused on post-sales & delivery as well as service-based customer retention. OnStar’s Dealer Maintenance Notification is one example, in which Dealers are notified when vehicle diagnostic codes indicate an upcoming need for service.   The choices for connected services available to dealers will continue to evolve rapidly as more of these OEM-provided connections become available, and as new dealer-focused connected services develop. Fleet Industry Offers a Preview for Dealerships For a window into the way that services are likely to develop in the next 18-36 months, dealers can look to the experiences of the Fleet industry. Fleets have been using telematics to manage vehicles and drivers for many years now, with obvious benefits in terms of additional uptime and increased driver productivity. These benefits have easily supported the development of several fleet telematics providers. As with dealer-focused connected services, Connected Fleet services were all originally delivered through third-party, aftermarket devices – but they are increasingly delivered through native OEM-provided connections. Most fleets include vehicles from more than one manufacturer, so there is a natural inclination for fleets to use brand-independent fleet telematics providers. Companies like Geotab , Donlen, FleetComplete, Spireon , Samsara and others offer comprehensive fleet management solutions that were all originally powered by aftermarket plug-in devices. Increasingly however, OEMs have enabled native data connections to these providers in response to demands from their fleet customers.  Ford Data Services , OnStar Business Solutions , and Toyota Data Solutions all offer connections for fleets through fleet telematics partners. Fleets can go to a provider of their choice and take advantage of OEM data connections when available, or use aftermarket connections for older vehicles or for OEM makes that are not yet capable of connecting to fleet applications. To create further options for fleets, some OEMs have also begun to create their own proprietary fleet management systems. GM offers its OnStar Vehicle Insights service, which provides comprehensive fleet management services. And in a recent announcement , GM is making OnStar Vehicle Insights compatible with aftermarket devices. Ford has also announced a similar move. Expect Similar Offerings, Options, and Interoperability for Dealerships These trends in Connected Fleet services point to the kinds of options that dealers should expect in the next 18-36 months. Dealers are similar to Fleets, in that most represent more than one OEM brand, plus used vehicles of varying ages. Dealers should therefore expect choices for their Connected Services between: Independent Service Providers using plug-in aftermarket devices Independent Service Providers using both aftermarket devices and OEM data feeds OEM-Designed Services using both OEM data feeds and aftermarket devices As fleet owners do today, dealers will need to choose the service provider that provides the best-connected services for their particular situation. It is a good idea to get started with an independent dealer-focused provider to begin to experience the benefits of Connected Dealership Management. An independent provider can get dealers up and running quickly, using easily installed aftermarket hardware. As dealers learn how to use these services effectively, they can then consider some of the OEM-provided or hybrid options as they come to market.