Digital Dealer - August 2017 - 46

By Ed Kovalchick
CEO and Founder,
Net Profit Inc.

// Fixed Operations

Want a 50%++
Parts Margin &
Other Benefits
Benny? Keep
Reading
The price you
pay for a parts
purchase makes or
breaks the ultimate
margin - never the
sale price!

any part over a $10 as too
much.
LOYALTY LOCKOUT

There is so much
more in the Aftermarket world than dealer
personnel, who have
never ventured there,
realize. With the constant
push backwards that used
vehicle gross is experiencing, along with some
of the 100K plus mile
vehicles running around,
the price of parts and
related benefits are
getting more and more
important to the used
recon process. And a
large internal parts
discount (as a fix) just
means the parts manager
takes it in the derriere for
the sake of the so-called
"team," even though the
UC manager considers

46

AUGUST 2017

The franchised dealer
parts world is quite limited
in many ways, more
than ever in these times.
Newer and stringent
manufacturer loyalty
programs now place an
unfortunate situation on
parts departments, which
create service carryovers
when parts aren't on
the shelf, especially in
domestic dealerships. The
unintended consequences
of having an overnight
order inconveniences
the customer, creates an
expensive loaner demand,
ties up valuable stall
space, and diminishes
tech production. Everyone
loses, and yet the needed
item is five minutes away
in the Aftermarket, or at
another like dealer down
the road. Is this program
demand really a good

D I G I TA L D E A L E R . C O M

idea?
OE equivalent or
better parts pricing to
the dealers, versus what
is available down the
street, sets up a huge
disparity. Oil filters are a
prime example, where OE
micron spec filters can
be commonly purchased
for around $2, (often
manufactured by the
same company - just a
different label) while they
generally cost some $4+
from the manufacturer.
Another factor is quality
in some instances - take
an unnamed manufacturer's penchant for putting
marginal tie-rod ends on
their pickup trucks (I see
a smile there). Far more
substantial ends are available locally for less cost,
including greasing zerks,
to assist in ensuring longterm use. Oh, and they
are from the exact same
parts manufacturer the

factory specs and buys their
tie rod ends from - so they
obviously recognized the
need for improvement for
the Aftermarket. Of course,
there are inferior parts
floating around in both the
Aftermarket as well as OE
parts (say "recalls" Randy),
so some study is needed in
any purchasing; however, it
isn't rocket science.
LOYALTY
WTHANK YOU

Where Aftermarket parts
are really important to a
very profitable margin is
applied to the used vehicles
of other makes, and the
relatively few high-mileage
vehicles using serviced. Be
loyal to your brand otherwise, keeping in mind that
the back money the manufacturer makes available
with some loyalty programs
is substantial, making up
much of the difference. The
truth is, you want your manufacturer to be successful,
or otherwise everyone is on
the street. The parts division
is a major supplier of their
profits, and they are forced
by the government to invent
in a substantial amount of
slower moving emission
parts for many years as one
example of a hidden cost.
Few (likely none) dealers
can survive on new-vehicle sales and their cheesy
margins, so used-vehicle
income is where keeping afloat, along with the
fixed ops, is vital. The vast
used-vehicle market is
some three times larger
than the annual new-vehicle
Continued on pg. 48


http://www.DIGITALDEALER.COM

Table of Contents for the Digital Edition of Digital Dealer - August 2017

Digital Dealer - August 2017
Contents
Letter from the Show Director
Rediscover the Lost Art of Mentoring
Developing a Dealer-Minded Attitude
The Potential Demise of the Automobile Franchise System?
Advertising ‘Attitude’ is Everything!
Does Your BDC Leverage Lead Data to Increase Sales?
Joe Wajda
Digital Dealer 23 Show Highlights: Top Sessions, Keynotes, Exhibitor Listings, Summary Agenda, & Attractions in Vegas
Data Drives Dollars: Google Analytics Is Your Key to Finding Serious Shoppers
5 Tips to Getting Your Customers to Sing Your Praises Online
Still Having Trouble Proving Social Media ROI? You're Not Alone
Clicks for Cars: How AI and Machine Learning Are Revolutionizing Automotive Marketing
Winner, Winner, Recall Dinner!
Vance Chrysler Hits a Home Run in Humanity
Want a 50%++ Parts Margin & Other Benefits Benny? Keep Reading
Digital Dealer - August 2017 - Digital Dealer - August 2017
Digital Dealer - August 2017 - Cover2
Digital Dealer - August 2017 - 1
Digital Dealer - August 2017 - Contents
Digital Dealer - August 2017 - 3
Digital Dealer - August 2017 - Letter from the Show Director
Digital Dealer - August 2017 - 5
Digital Dealer - August 2017 - Rediscover the Lost Art of Mentoring
Digital Dealer - August 2017 - 7
Digital Dealer - August 2017 - Developing a Dealer-Minded Attitude
Digital Dealer - August 2017 - 9
Digital Dealer - August 2017 - 10
Digital Dealer - August 2017 - 11
Digital Dealer - August 2017 - The Potential Demise of the Automobile Franchise System?
Digital Dealer - August 2017 - 13
Digital Dealer - August 2017 - 14
Digital Dealer - August 2017 - 15
Digital Dealer - August 2017 - Advertising ‘Attitude’ is Everything!
Digital Dealer - August 2017 - 17
Digital Dealer - August 2017 - Does Your BDC Leverage Lead Data to Increase Sales?
Digital Dealer - August 2017 - 19
Digital Dealer - August 2017 - Joe Wajda
Digital Dealer - August 2017 - 21
Digital Dealer - August 2017 - 22
Digital Dealer - August 2017 - 23
Digital Dealer - August 2017 - Digital Dealer 23 Show Highlights: Top Sessions, Keynotes, Exhibitor Listings, Summary Agenda, & Attractions in Vegas
Digital Dealer - August 2017 - 25
Digital Dealer - August 2017 - 26
Digital Dealer - August 2017 - 27
Digital Dealer - August 2017 - 28
Digital Dealer - August 2017 - 29
Digital Dealer - August 2017 - 30
Digital Dealer - August 2017 - 31
Digital Dealer - August 2017 - 32
Digital Dealer - August 2017 - 33
Digital Dealer - August 2017 - Data Drives Dollars: Google Analytics Is Your Key to Finding Serious Shoppers
Digital Dealer - August 2017 - 35
Digital Dealer - August 2017 - 5 Tips to Getting Your Customers to Sing Your Praises Online
Digital Dealer - August 2017 - 37
Digital Dealer - August 2017 - Still Having Trouble Proving Social Media ROI? You're Not Alone
Digital Dealer - August 2017 - 39
Digital Dealer - August 2017 - Clicks for Cars: How AI and Machine Learning Are Revolutionizing Automotive Marketing
Digital Dealer - August 2017 - 41
Digital Dealer - August 2017 - Winner, Winner, Recall Dinner!
Digital Dealer - August 2017 - 43
Digital Dealer - August 2017 - Vance Chrysler Hits a Home Run in Humanity
Digital Dealer - August 2017 - 45
Digital Dealer - August 2017 - Want a 50%++ Parts Margin & Other Benefits Benny? Keep Reading
Digital Dealer - August 2017 - 47
Digital Dealer - August 2017 - 48
Digital Dealer - August 2017 - Cover3
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