Thursday, 22 March 2012 15:53

The Levan Group—Where Crash and Mechanical Parts Intersect

It’s like water and oil; church and state—the Democrats and the Republicans. For many decades, there have always been two disparate sources for collision and mechanical parts.

But now, still mired in an economy that is improving but lagging, aftermarket parts distributors are starting to think outside the parts box and adding mechanical parts to their collision inventory and vice versa. When ancillary revenue becomes vital to the bottom line, every company starts looking harder for the “new, new thing”. By being a one-stop parts source and expanding their inventories, companies are increasing profits and building a larger, more loyal customer base.

The Levan Group, Inc. has been in business for two decades and has five locations in California and Texas, so owner Kenny Levan has seen the collision parts industry change and re-invent itself on many levels. That’s why he began incorporating mechanical parts into his collision inventory within the last several years.

“We’re always looking for ways to increase our revenue, because once you rely totally on certain types of parts, you’re limiting yourself,” Levan said. “We discovered that our body shop customers want certain mechanical parts to supplement their crash parts. It’s a matter of convenience and if we can match the prices they’re finding elsewhere, it’s an easy decision for them.”

By offering a limited range of mechanical parts, such as radiators, lamps, window regulators, shocks, brake parts and struts, for example, the Levan Group has attracted a new group of customers, including nearby mechanical shops, walk-in cash customers and a whole new business segment they had never tapped into before—the do-it-yourself (DIY) market.

“The DIY customers are starting to save money by doing repairs they would not consider before,” Levan said. “Now, we get about 30% of our business from these people. And by adding more chemicals, clears, bondo and sand paper (he does not sell paint), we are appealing more and more to the growing DIY part of our overall business.”

Owned and operated by six brothers, Kenny, Michael, Brandon, Andy, Harry, and Henry; each Levan oversees one location while Andy works at all five warehouses when required. It’s a hardworking family that came to the United States from Vietnam 33 years ago. In 1988, they started the Levan Group with little capital but lots of sweat, Levan said.

“I came to this country when I was 13 and I always tell people, I started working the minute I got off that boat and haven’t stopped yet,” he said. “It’s a family business, so we make the decisions together and we work as a team. We’re always thinking of new ways to make our company better, and adding parts or supplies to our inventory has turned out to be a wise move. We carry mechanical parts at all of our Bay Area locations and will be expanding to include Sacramento very soon. By the end of 2012, all of our Northern California locations will have collision and mechanical parts, as well as shop supplies.”

Other parts distributors have merged collision and mechanical parts and seen it lead to more profits and additional customers as well. SSF Imported Auto Parts in South San Francisco is such a business, marketing both mechanical and collision parts with good results, according to Bill Foxworthy, the company’s Collision Parts Director.

“When business slows down, both mechanical and collision shops start looking around for new sources of income,” Foxworthy explained. “Body shops obviously need mechanical parts to complete a lot of their repairs and more and more people are buying salvaged cars, fixing them up and re-selling them, especially with a lot of the higher-end imported vehicles we sell parts for.”

SSF sells a fair amount of front end parts, water pumps, fans, bearings, condensers, wheel components and air conditioning parts to body shops. Conversely, mechanical shops are buying more headlights, grill, emblems and other accessory-type body parts as needed, according to Foxworthy. It’s hit-and-miss and tough to track, but Foxworthy knows that SSF is providing a value-added feature by offering both. SSF sells collision parts for 80% of the car nameplates they also sell mechanical parts for, including BMW, Mercedes-Benz, Porsche, Volkswagen, Audi, Mini Cooper, Saab and Volvo.

“Sure, our mechanical lines are our bread and butter,” he said. “But we’re starting to see that the two types are slowly morphing together, so we realize that we need to keep selling both. When business starts lagging, we see a spike in collision parts sales, so we know it’s a necessary part of what we’re selling. We’re in an age of convenience and shops realize time is money. If they can improve cycle times as a result, it’s a win-win, definitely.”

Foxworthy has been in parts for several decades, so he has seen the parts industry change with the Internet and other technological advances, he said. “The auto repair industry has seen a lot of drastic changes, but in other ways they’ve been reluctant to change. Selling both mechanical and collision parts would be a logical alternative, especially when we’re all fighting for that extra dollar. But, it’s not the traditional way of doing things, so aftermarket distributors aren’t going that way. The overall attitude is we're not going to change something that's already working. But, we all know that’s shortsighted thinking.”

By incorporating aftermarket collision parts into their inventory mix, Midway Aftermarket in Kansas City, Missouri has benefitted by the resurgence in the DIY market while appealing to body shops that want a mix of recycled parts coupled with new aftermarket parts, Marketing Director Aimee Studna explained.

“For more than 20 years, our salvage yard has been our core business,” she said. “Several years ago, we started identifying a need with our customers who wanted a mixture of recycled parts and aftermarket parts, both collision and some mechanic al parts, mostly air conditioning parts and radiators. Now customers ask about them and we sell them right alongside the crash parts and our recycled inventory. This way they get a mix of new aftermarket and recycled parts, which appeals to a lot of the insurance companies.”

Can collision and mechanical parts co-exist together in the same warehouse? Will automotive shops of all types gravitate toward this one-stop shopping approach to acquiring parts and how will the OEM’s react when it starts becoming more than just a minor trend? Stay tuned, because we’ve learned that if money is involved, people will adapt and quickly change their ways of thinking in the pursuit of increased profits and a bigger piece of the overall parts pie.

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