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Bryant Gibby

Bryant Gibby Used car manager

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Down with the accessories department?

     Hopefully I’m not alone on this one, but I have gotten to the point where I basically hate our accessories department.  I consider our accessories department a necessary evil at our dealership because I know we can’t do without it and I know we can’t get rid of it due to the fact they generate extra profit for the dealership.  With all that said, I would still love to get rid of it!

 

     Let me explain the reason for my hatred.  As a sales manager, I get paid on the front and back end profit of each deal. I don’t get paid a dime on what the accessories department does. My main complaint is our accessories manager gets a chance to sell his crap before the customer gets into the finance office and sometimes the accessories that are included into the financing make it to where our finance managers can’t be as profitable as we need them to be. I find that I am purposely sabotaging the accessories manager’s opportunity to sell product by lying to him and telling him the deal is maxed out. I do that so our finance department has more than enough room to sell their back end products and still have a buyable deal with the banks.  My other complaints are I don’t really like the guy too much and he is constantly pissing off our customers and tanking my salesguys’ surveys.

 

     Anyway, the point of all this is that I think there has to be a better way to set this up to where I don’t hate the accessories department.  I get the argument that he needs to talk to the customer before they go into the finance office so the accessories can be put into the financing but that is the part that bugs me the most.  Maybe the solution is to make it where salespeople and sales managers get paid extra on deals where accessories are sold. Or maybe there is an alternate way to get the accessories financed. Who knows! Any ideas you guys have would be great because I’m sure that they are better than the current process that we have!

Arnold Tijerina
Have the parts dept set up a "cost" to the sales department and the difference between what you sell it for to the customer and what the "cost" is would be added to your gross profit on the deal. This way, the parts/accessories dept gets some revenue as does the sales dept. On top of that, if you add the profit into the front-end, that will motivate the salesperson to help sell the accessories by the increase in the commission-able revenue he generates. Another option would be to add the profit into whichever "end" sells the accessories - ie. if the finance manager sell them - it's back end profit. I've done that at several stores and it always works great. In fact, one of the required items after the close but before finance is a model specific accessory form. This way, even if the salesperson is lazy and won't try and "sell" them any accessories, you've just set up your F&I guy to be able to. Many customers don't even know they CAN include accessories into the financing and there is no better way to bump a down payment that by justifying it with accessories.
Bart Wilson
@Arnold, can you remain competitive? I know that parts is going to make a health margin, and after you give a little gross to sales can't the customer go elsewhere and buy it cheaper? I have used the model-specific order form in the past and it works great IF you spiff the salesperson on what they sell. That doesn't solve Bryant's problem but I think that is the best solution for the store. Let the salespeople help accessories by paying them.
Arnold Tijerina
@Bart You're right in that customers can probably get the accessories cheaper elsewhere. The edge the dealers have that NOWHERE ELSE CAN OFFER is including the accessories in the financing. The customer may not have $3000 to put into accessories but they may have an extra $60/mo to finance them and it may be worth it to them. You emphasize convenience, low initial monetary output and dealership quality installs. When you talk to the customer about 3rd party accessory vendors, you use the words "spend" and "expense". When you talk to them about YOUR accessories, you use the words "invest" and "increase re-sale value" and "convenient" and "warranty". As for WHO is making the profit (parts vs. sales), my personal opinion is that internal departments should not compete. I mean, come on, the profit is all going to THE DEALERSHIP and that is what matters. The parts guy should realize that he's going to generate MORE revenue by selling to the sales department at a discount and getting them actively involved (and motivated) to sell accessories than by being greedy and trying to hold all of the gross within his department. If I was the General Manager, I would decide what the markup to sales WILL be, not let the Parts Manager do it. Ultimately, it's what will increase profit for the STORE. I do understand what Bryant is saying and I understand his frustration, having been in both scenarios. You're spiffing the salesperson by putting the profit from the accessories in the front-end gross. The higher the front-end gross, the more his/her commission will be. There is no need for an "extra" spiff. Nothing motivated me more to sell accessories when I could pick up an extra $1000 in profit. That's $250 in my pocket.
Bryant Gibby
@ Arnold. My initial thought was the same as Bart's. Our parts department marks up the accessories 40% and if we had an additional markup to to that, we wouldn't very competitive at all. Also, I agree with what you said about it being more convenient for the customer to put the accessories into the financing. However, that is my original complaint is that those accessories cut into the back end profitability. I'm sure if we were to set up your proposed plan, the profit we make on the accessories sales would be significantly less than what my finance guys can make if the sell warranties, gap insurances, etc.
Arnold Tijerina
@Bryant What if your parts department only marked the parts up 10% to the sales department? Could you make money on accessory sales to customers then? That's what I'm talking about. The parts department doesn't HAVE to mark them up to the sales department 40% - they choose to which, of course, leads to you not liking them because they eat up your profitability. Also, as for your F&I department, say that model-specific accessories form was included in the deal jacket when it went into finance. One of two things happen.. either the deal is maxed out and you can't add anything to the front without exceeding the advance or you can. If you can't, you sell the accessories with a down payment bump. in a lot of cases, the bank will allow a warranty or gap insurance purchase on top of the advance. It's just more to sell Bryant but it ONLY makes sense if the parts department decreases their markup to the sales department. None of this matters if they're price gouging the sales department. If the parts manager insists on marking up accessories 40% (which sounds to me like a retail price anyways) then make the accessory pitch AFTER the customer leaves finance .. maybe during the delivery process. If, at that point, the customer DOES want accessories, the option to include them in the financing could be presented at which point the finance manager would have to assist the customer in resolving any advance issues that may be present. If he won't work with you then do YOUR thing, THEN let him try to make the sale. Notice I said "him". If he wants all the gross, let him earn it. Don't put the accessory gross in the back-end, put it in the front. It shouldn't matter to you since you get paid on both. It will matter to the salesperson since, for the most part, he'll only get paid on the front-end gross. Close the deal THEN present accessories. If the customer wants any, re-pencil the deal with the accessories included. If you're maxed out, go for the down payment bump. If done right, you might even get more down payment than you really need which would also increase your front-end gross and leave your back-end open for your F&I guy.

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