ROCHESTER, Mich.New research indicates the automotive accessories business is trending upward but vehicle dealers are losing sales to the aftermarket channel.
The accessory market achieved $33 billion in 2014 sales, according to the Specialty Equipment Market Association (SEMA). However, recent studies by Rochester-based Foresight Research (Pvt.) Ltd. show that nearly half of new car and truck buyers accessorize their vehicle, with average accessory expenditure rising by one-third between 2011 and 2013, but the biggest share of that spending continues to occur in the aftermarketwith most auto dealers failing to capture their share.
Accessories offer large and lucrative profit potential for new car and truck dealers, said Nancy Walter, vice president of business development at Foresight. Our research shows that buyers who do accessorize their vehicle will spend an average of almost $2,000, with certain demographics spending as high as $4,800.
However, two-thirds of new car and truck buyers report that their dealer did not initiate an accessory conversation during the sales process and only 36 percent of accessory buyers obtain their necessary accessory information from dealership personnel.
Given that total average accessory spend doubles when a sales effort actually takes place, this represents a lot of profit walking out the dealer's door.
Foresight said accessories can offer other benefits beyond simply revenue.
The company's latest report on the accessory market noted that four in 10 buyers were influenced to buy their vehicle from a particular dealership due to accessories being available at the time of vehicle purchase.
Since we last published this report in 2013, the accessory market has expanded, in part due to buyers' increasing demand for accessories in the performance and technology sectors, Ms. Walter said. We responded by increasing the number of individual accessories we are measuring in this year's study from 55 to 72; some of these new accessories barely even existed two years ago.
The firm's report lists a number of best practices auto dealerships can adopt to increase their share of the accessory market, Ms. Walter said, adding that in addition to effective promotion of accessories and in-store displays, any accessory sales procedures should take into account dealers' competitive advantages and weaknesses vs. aftermarket providers.
This report first appeared on www.tirebusiness.com
Buyers perceive that dealers are better than the aftermarket on accessory installation, quality and durability, she said. Alternatively, the aftermarket is perceived to offer better pricing. An effective accessory strategy would feature all of the dealer strengths and find ways to overcome the pricing perception.
Foresight's 2015 Accessory Immersion Report, scheduled for publication in June, will include accessory installation rates for key auto- motive accessories by brand, segment, geographic and demographic groups, as well as accessory spending trends, in-store best practices and other data.
The company specializes in syndicated and custom studies focusing on key influencers of purchase decisions in the automotive industry.