Autonomous vehicles are designed to greatly reduce the risk of collision, which is great news for drivers. But for dealerships, this is a solution that also poses a problem. Over 50% of a dealer’s gross profit comes from collision repair. Collision repair is a lucrative high-margin business that helps keep dealerships afloat. Original equipment manufacturers rely on a steady stream of collision repair revenue. But experts predict that the $5.6 billion collision industry of 2015 will drop to $2.7 billion by 2030, and $1.4 billion by 2040. Fixed Ops managers should expect to see lower collision parts revenue. So how can dealerships mitigate that loss to sustain their business? The answer is to focus on online sales channels like having your own eCommerce auto parts store—opening new revenue opportunities. While cars may not always need a driver, they will certainly always need parts. Let’s look at how your parts department can still make money with the rise of autonomous vehicles.
With less collisions, and the respective profits dealerships will lose in repairs, it’s imperative to find new sources of revenue. In the current market, there is an opportunity to not only replace this revenue, but to actually exceed it. Selling auto parts online is a burgeoning business with tremendous growth potential. Customers increasingly buy online, particularly for things like auto parts which warrant research and comparison. In fact, roughly 9 out of 10 shoppers now conduct online research before making an auto parts purchase. Making your products accessible right where people research them will greatly increase your sales. When they are debating a part to buy, you want to make that decision as easy as possible.
Online vehicle parts and accessories sales are already a $12 billion business, and Amazon is expected to sell $8 billion in parts this year. Selling online means you can sell worldwide and reach a much broader audience. Autonomous vehicles are still a debated topic, and not all markets will adopt them as quickly. When you sell online, you reach buyers in areas where AVs may not be as prominent. Boosting your online customer base is key to generating more sales, and can more than make up for a loss of collision repair revenue.
Some parts manufacturers offer substantial OEM kickbacks and incentives for hitting certain sales numbers that can only be achieved through digital sales. It’s a volume game when selling online. While your margins may be lower, you’ll make up for it with sales volume and gross profit that you could never accrue in-store. With an effective online auto parts marketing strategy—you can be selling hundreds of thousands of dollars worth of parts and accessories every month.
Autonomous vehicles will take over the highways sooner than people realize. Additionally, all new cars, autonomous or not, are now equipped with more safety features, such as park-assist and lane-departure warning, which reduce the number of accidents. This may mean fewer collision repairs, but it also means more parts to fix. Automated vehicles may be on the rise, but in the grand scheme of the automobile industry, these vehicles are still in their infancy. While manufacturers work out the kinks, your dealership can profit from their trial and error. Each new model will come with new problems, so position yourself to provide those solutions online.
Be sure to stock parts that could malfunction regardless of collision damage. Wiper blades, tires, speakers, floor mats, batteries, fans, belts, and more will be necessary repairs even when all vehicles are automated. Offer these parts online with incentives to buy, to compete with other dealers. All cars will need certain parts replaced, even without collisions. Keep a steady stream of inventory online with appealing delivery options. Free delivery or free ship-to-store both offer advantages to dealers and customers. When buyers save on delivery, they are more likely to purchase from you. And when they pick-up in store, you can market directly and up-sell on the purchase.
The more complicated a car’s systems are, the more things there are to go wrong. And when things do go wrong, they are more difficult and costly to fix. Delicate sensors and intricate technology are outside of a driver’s scope of expertise. Not only will drivers need to take their car in for service to make these types of repairs, but they are also relying on dealers to fix something they can’t comprehend. This puts dealers in a favorable position, as tire store mechanics and oil-change shops will not be familiar with each new innovation.
Dealerships stand to profit from the expensive parts and can also command higher fees to complete the complicated repairs. A collision can wreak havoc on several systems in a car. So while there will be fewer accidents, each wreck will cost more than it used to. Make sure to communicate this on your website—promoting your ability to address these technological issues. Technology is one area where drivers will likely seek OEMs, to avoid risk of incompatibility or malfunction. When they trust your expertise, you gain their repeat business when other things go wrong.
The online auto parts industry is a giant that’s steadily growing. Positioning yourself for optimal online parts sales requires marketing expertise. A fine-tuned auto parts marketing strategy can yield excellent returns, but uninformed marketing (or lack-thereof) will just get lost in the fray (Read: effective pricing strategy to increase online parts sales) . How do you stand out in the crowd in a saturated online market and reach desired customers? It’s one thing to list your parts on your website and quite another to track customer trends, competitor strategies, and investment returns. E-commerce is multi-dimensional and requires multi-channel marketing as well as frequent refining.
Employing industry experts to market your products is crucial to your success. OEM Interactive can help you sell more car parts and accessories online with our cutting edge marketing strategies. If you’re ready to boost your sales and offset lost collision repair revenue, contact us today! We’ll keep you ahead of the curve to maximize the AV trend for your benefit.