Some collision shop owners and managers make it over to the SEMA Show, but I’m always amazed at how few seem to grasp the enormous profit potential for their shops. I’ve written about this before, but let me refresh you on a few details.
SEMA says their specialty automotive industry is now about $31.85 billion with 7,144 member companies. Retail sales of these products increased more than twice as fast as the general economy. One dealership body shop manager told me they did $25,000/month in accessory sales and installations. I don’t know the exact numbers, but even with our diminished economy, automotive accessories are still selling well.
In the October issue of Restyling Magazine (www. restylingmag.com), columnist Larry Weiner says, “In spite of the current situation, new-vehicle personalization packages continue to remain extremely popular.” He further points out that “many new vehicle dealers are only interested in installing factory accessories in their service department.”
I’ve seen shops with top insurance company DRP relationships getting fewer and fewer job referrals. Many shop owners have asked me how they can obtain authorized collision repair facility status with local new vehicle dealerships. Here is an obvious toe in the door.
The Market Is Changing
It seems the public has become more aware of collision repair facilities in recent years. Insurance companies have been responsible for part of that, and another unfortunate part has been fraud cases giving the industry a bad name in some parts of the country. More people are looking on-line for a repair facility and perhaps looking for shops that offer something more than the others. That “something more” could be products that bring in customers even when they haven’t had an accident or vehicle damage. Some good ones to start with could include alarm systems, child restraints, pet restraints, back-up lights and cameras, wheels and more.
Much of the growth comes from sales of parts and accessories for sport compact cars, but there has also been an explosion in the sale of everything from ten-dollar vinyl flame decals to $3000 turbochargers. Younger buyers are looking for flashy items like custom seat covers. They want nitrous oxide injection systems to dramatically boost the horsepower of small car engines, plus custom wheels and tires to add uniqueness. Window tinting is big, along with performance exhaust systems and chrome running boards. Even wash and wax product sales increased by $200 million. Performance tires, custom wheels and suspension and steering enhancement sales increased by nearly a billion dollars, in one year.
Our culture has become more and more a car-as-consumer culture. People spend an enormous amount of time in their vehicles. With cell phones, CD stereo systems, laptop computers and various wireless devices they can operate in the car, today’s drivers have mobile offices and recreation rooms they can take on the road. This opens up a market for an endless array of products that could be sold at a body shop just as easily as at a dealership or any other location.
Creating Profit Centers
A major marketing buzzword these days is “the profit center.” Many businesses look for ways to enhance their profit margin by offering a few ancillary products that a certain percentage of people will buy just because they’re there. One of the best examples of a place that uses “profit centers” is your local car wash. Selling car washes may be the primary product sales, but there are dozens of small profit items for sale throughout the facility. You’ll generally find candy and soda machines, car fresheners and endless doo-dads to hang in a vehicle. Sometimes there is also a separate counter selling jewelry, watches, cameras, T-shirts and just about anything else you can imagine. Even the detail section is often farmed out to a separate entity and operated as a separate profit center.
How Can A Shop Create an Accessory Profit Center?
One approach could be making a deal with one of the many automotive specialty shops in the area that focus on stereo systems, car alarms and other simple accessories. Few of these vendors have facilities to install more complex items like running boards and other items that require professional welding. I found a couple of accessory shops that regularly referred collision repair work to a local shop. This kind of exchange is an obvious negotiation opportunity that every shop should include in its arsenal of referral connections.
Shop owners ready to consider this potential profit center will want to put in an accessory and restyling counter. Next they will train estimators and desk people to start asking every customer, “Is there some accessory we are offering that will enhance the power or beauty of your car?”
A Complete Shift in Marketing Identity
I’ve found many shop owners reluctant to make this kind of change in identity. They’ve relied on auto body repair and refinishing jobs as their only business for so many years, it’s difficult to start thinking in a new direction. But it’s becoming more and more necessary to do so.
Entering the merchandise marketing arena can be scary for a shop owner who’s never had to compete in that area. Real advertising, distributing coupons, and possibly even setting up shop at local swap meets would be an entirely new set of tasks for a shop owner. The upside of the activity could be hundreds—and possibly thousands—of new prospects informed of the existence of his or her business. And perhaps thousands of dollars in profits too! There are billions being made by sellers of these products. Why not get your share?
What percentage of this revenue could a shop owner capture with a bit of creative marketing? And more importantly, what would it do for his or her collision repair business to get these vehicle-savvy, eager buyers visiting the shop? There’s only one way to find out.