Dealer Newsmaker Q&A Nancy Walter and Chris Stommel
This summer, Foresight Research published the results of its Channel Immersion and Perspective Study (CHIPS), which includes data on automotive accessories. Previous accessory sales research has shown that while customer spend on accessories is increasing, dealerships have only recently targeted the market as a potential source of new revenues. Foresight president Chris Stommel and vice president of business development Nancy Walter gave Aftermarket Business World a preview of this year's study results.
Are we seeing more sales of auto accessories?
Nancy Walter: The number of buyers that had already installed accessories was essentially flat from 2013 to 2015, but the number of buyers that intend to buy accessories jumped from 19 percent in 2013 to 26 percent this year. Part of that is because the millennials are coming back to the market.
Chris Stommel: We're just now digging into the data, but in the past the mix of older buyers continued to grow and they were dominant in the last study. One of the most startling findings this year is that younger buyers have come back to market, and that has major implications in terms of behavior, buying motivation, actions and everything else. Our data shows that those younger buyers and non-Caucasian buyers will far outspend other groups on accessories.
Are dealerships doing a better job of selling accessories?
Nancy Walter: The number of buyers that report the dealer attempted to sell them accessories went from 32 percent in 2013 to 43 percent in 2015.
Chris Stommel: That isn't equally across the industry, though. Some dealers and brands do a better job than others. The number of dealers that have a display for accessories has increased, and that helps sell those items.
How are dealerships perceived as a source of accessories, compared to other channels?
Chris Stommel: The Internet definitely has a price advantage in terms of perception. The Internet is gaining there, while dealerships are going down in terms of perception. When we look at quality, though, dealers are considered the leading source (47 percent) compared to the Internet (19 percent) and the aftermarket (12 percent). Dealers also lead in installation, with 56 percent of respondents having a positive perception of dealers versus 16 percent for the aftermarket.
What are some best practices that dealers can use to increase accessory sales?
Nancy Walter: Accessories can be big business, particularly in the pick-up, sporty, and luxury vehicle segments, and with younger or non-Caucasian buyers. Accessorized vehicles on the show floor do the best job of influencing accessory sales. Accessories that contribute to comfort make up the majority of those sales.
Why have dealers traditionally not sold a lot of accessories?
Chris Stommel: When we first did this study, the percentage of buyers reporting that the dealer even raised the topic was pathetic. It was tiny. At that point, most of the dealer's margin was coming from the vehicles themselves. Now they have to focus more on service and parts.
The one thing I heard over and over was that the dealer's job was to sell the car and put the deal to bed. The buyer has a limited list of things that I have the opportunity to introduce during that backroom conversation. To the extent that I introduce another topic into the mix, I jeopardize the deal. That resistance seems counterintuitive, but that was a big component.
Now there's a big push to connect buyers to ongoing service, and accessories are creeping into that conversation as well.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
