Eager to boost sales of custom wheels, fog lights and other profitable automotive accessories, General Motors Corp. is hiring independent distributors to speed aftermarket parts to car dealers in one day.
The distributors will help GM's dealers get a larger share of the $27 billion aftermarket parts business.
Car dealerships are chronic underachievers in the accessory business. Few carry sufficient inventory of custom parts, and most lack savvy salespeople to sell them.
GM's Service Parts Operations has established accessory distributors in 13 markets. It wants to set up in 85 markets by mid-2004.
Here's how they work: The distributors carry substantial inventory of GM officially licensed products. When a dealership sells, for example, a ski carrier, it calls the distributor, which delivers the accessory within a day.
According to GM, only half of its 7,000 dealers sell accessories and together they have only about a 5 percent share of the aftermarket parts business. With the distributors, dealers won't need to carry inventory or incur storage costs. If their service departments are busy, the distributor can even install the parts.
Waiting for parts
Richard Moreau, GM parts manager for Lee Auto Malls Oldsmobile-Cadillac-GMC-Honda in Auburn, Maine, is pleased to see the service. The dealership loses a lot of accessory business because it needs up to 10 days to get parts. ``It gives us an opportunity to sell GM accessories we've never been able to before,'' Mr. Moreau said.
The dealership stocks smaller parts such as sill and splash guards but hasn't been able to stock bed liners or running guards because of lack of storage space.
Specialty stores dominate the market. The Specialty Equipment Market Association, a Diamond Bar, Calif.-based trade group for the aftermarket-parts industry, said that independent shops receive $5 out of every $6 spent on accessories. New-car dealers have about 16 percent of the business.
Specialty stores typically carry much larger inventories than car dealers, and their salespeople often are auto enthusiasts who know their customers well.
Customers can expect aftermarket parts to be in stock. If a part is out of stock, a call to the store's warehouse often can get it in hours.
Keeping the relationship
Mark Christopher Chevrolet-Cadillac-Hummer in Ontario, Calif., established a GM accessory distributorship for Orange County. Because the distributor buys accessories in bulk from GM, it charges dealers about 15 percent less than the auto maker, said Christopher Leggio, vice president of Mark Christopher.
``The average customer spends $1,400 on accessories after they buy their vehicle,'' Mr. Leggio said. ``This way, the customer keeps the relationship with the dealer.''
The accessories are backed by GM warranties, and the auto maker's GMAC financial unit will finance parts.
To qualify as a GM distributor, the business must be able to provide distribution and a warehouse with sufficient inventory, installation support with vans and trucks, and marketing and selling support. According to GM, the typical accessory dealer installer has about 17,500 square feet of storage space.
GM identified 85 markets that the distributors will support. Thirteen markets are covered thus far. The car maker hopes to have 32 by year-end and all of them by mid-2004.