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Old 01-13-2016, 09:01 AM   #1
InBloom94
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Default any ideas on how to increase wholesale?

any ideas on how to increase wholesale sales?
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Old 01-13-2016, 10:21 AM   #2
tnpartsguy
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the only wholesale business I'm interested in is repair shops. With this MyPriceLinkCrap, the body shop business is a waste of time and effort.

Visit the local shops, and ask them why you don't get called. Talk to them, find out what they need, and ask them to give you a shot at earning their business. Most important thing is.....DON'T DROP THE BALL!!!
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Old 01-13-2016, 10:31 AM   #3
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Originally Posted by tnpartsguy View Post
the only wholesale business I'm interested in is repair shops. With this MyPriceLinkCrap, the body shop business is a waste of time and effort.

Visit the local shops, and ask them why you don't get called. Talk to them, find out what they need, and ask them to give you a shot at earning their business. Most important thing is.....DON'T DROP THE BALL!!!
Great post - those are the same thoughts I had.

In my experience playing in the wholesale collision business requires deep pockets and a commitment from the Dealer or GM that will allow the parts department to increase their space and inventory level to the point they can complete with the dealers who already control the market.

Additional headaches associated with the collision business are the demands body shops often place on dealerships as it relates to taking returns and the fact that relationships seem less important as body shops get consolidated or individual body shops switch to mega-dealers who can offer parts for all the brands and provide one-click billing.

There are opportunities with repair parts but that requires getting out of the store or hiring an outside salesperson to solicit the accounts.

I have known some stores to do a fair amount of business with government agencies. Government agencies are more likely to want to use OEM parts if they do in-house repairs and they might not be as price sensitive if the level of service is high.
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Old 01-13-2016, 03:34 PM   #4
TORGY
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repair only less than 3% returns compared to 20-30% in returns. Most of which they collision shop get paid for and then you give them credit to return parts that were never installed.
Seems like fraud to me but you don't see anyone launching a task force to investigate these criminals.
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Old 01-14-2016, 09:12 AM   #5
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repair only less than 3% returns compared to 20-30% in returns. Most of which they collision shop get paid for and then you give them credit to return parts that were never installed.
Seems like fraud to me but you don't see anyone launching a task force to investigate these criminals.
I'm guessing you mean that typical returns for hard parts sold to repair shops only generate a 3% return rate where parts sold to collision shops generate a 20 - 30% return rate.

I agree that the practice of returning collision parts that have already been billed to the insurance company seems like fraud to me too. I'm somewhat happy to concede that I was so naïve when I first learned of the practice that I had to have someone explain to me why body shops returned so many parts. (The thought of billing the insurance company and then returning the part for credit never crossed my mind.)
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Old 01-14-2016, 09:17 AM   #6
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Default Ebay and Amazon....

As another thought, although the margins can be razor thin I know a lot of OEM parts are sold via Ebay and Amazon.

For most stores it probably wouldn't be worth the expenditure of time/effort but if your store needs to generate more return allowance or you have some employee time that's not fully utilized it might be worth investigating.

If nothing else, you could check EBay's historic sales results to see if there is any demand for obsolete parts you have in inventory.
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Old 01-18-2016, 10:47 AM   #7
BCCParts
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any ideas on how to increase wholesale sales?
It seems at our dealership price, availability, and speed of delivery is what counts most. 50% of what we do monthly is due to wholesale. Getting your foot in the door with rock bottom pricing gives you a chance to show how well your team can provide. I typically go in with a deep discount and then do a quarterly price bump. Your margins can take a hit if the wholesaler does volume and you really need to make the dealer principal aware of this. The saying a buck is a buck doesn't always matter.
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Old 01-18-2016, 01:02 PM   #8
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Getting your foot in the door with rock bottom pricing gives you a chance to show how well your team can provide. I typically go in with a deep discount and then do a quarterly price bump.
That seems like a smart strategy - once you have built a relationship and demonstrated your performance your clients might not be quite as price sensitive.

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Your margins can take a hit if the wholesaler does volume and you really need to make the dealer principal aware of this. The saying a buck is a buck doesn't always matter.
Excellent point.

I can envision a PM who's working hard to generate more net for the store and then gets grief from the Dealer because the Dealer's kid went to a 20 Group Meeting and the store had the lowest parts margin in the room.

One of my all-time favorite sayings - "No good deed goes unpunished."
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Old 01-18-2016, 01:34 PM   #9
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Yes we are always a topic of the 20 group. Confusion is added when we try to compare other dealers volume in house vs out. Most of similar dealers in our group are close to a 75/25 split RO sales vs Wholesale sales. That shows greatly in our reports.
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Old 02-17-2016, 12:46 PM   #10
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I was at a Honda Dealer previous to GM and we had 30%-40% of gross from our wholesale, we were not large, but had a good business until you looked closer. For that gross we had to dedicate 2 full time drivers, 1 part time driver, plus took up both counter guys phones taking the orders (most wanted that person to talk to). When the parts manager left and I analyzed the information we were so far in the hole that we ended up creating a very strict return policy, most body shops left after that and we shifted the "wholesale parts inventory" to tires and fast moving service parts and we saw a huge jump in profits and a huge decrease in personnel expenses, Happy GM. Be careful in wholesale and analyze all the data and expenses. I can't understand how the big dealers are profitable in wholesale especially since many travel great distance to deliver and have large staff dedicated to wholesale. I maintain what I have now, but am not interested in growing it at all. For a small/medium dealer I have found it's not an effective use of capital or resources.
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Old 02-17-2016, 02:25 PM   #11
InBloom94
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Default interesting

Interesting...definitely sounds how I want to do things around here as well, problem is that the GM here is hung up on wholesale because the owner of this store also owns a Ford dealership and apparently they do a lot of wholesale...it's quite frustrating to say the least trying to explain anything to him...we do not currently stock tires because we do not even have a tire machine in the shop if you can believe that, so when we do order tires, they usually come in the next day and we have to send them down to the stupid Ford store that he owns to do it there and they rape us every time...there are lots of things around here that do not make any sense...I wish I could somehow make them see the light. I'm damn sure gonna give it my all.
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Old 02-18-2016, 05:09 AM   #12
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I normally try to put it in investment terms when talking to owners/GM. CP Service Department GP% = 34-38%, Wholesale GP% = 14-18% (if your aggressive even less and factoring any purchase money it's still 18-24%). If he had 100,000 to invest in two stocks with the returns listed above, where would you focus your investment money. You have to work twice as hard to get the same amount of profits. Then I would break down the total expenses, I've found for our level of business the wholesale expenses are a huge proportion of the total GP, and for Service it's a fraction, Or compare it to a used car (most get it when you talk from the front end). Of course it doesn't hurt to have both service and wholesale, unless your expenses are exceeding your profits, in my case they were so we set up policies to get back in the black and when we did we lost most of our wholesalers, but the company as a whole was better and we reinvested in service and it paid off huge.
That really sucks, do you send them down to the other dealer or do you take them off at your facility and transport them down? You could always try selling him on tires straight from the mouth of NADA about the impact of the tire business. From NADA: 15% of automobiles that come through service Department need tires, of those needing tires 75% will buy from the first that presents prices, of those 75% who buy 78% will have their vehicle maintained in the same place they buy tires. Based on this data, you should be able to calculate the money your losing if you are sending them down to the ford dealer.
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Old 02-18-2016, 07:11 AM   #13
InBloom94
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we take them off here and transport them down there which is about a half mile down the road...not to mention the fact that when they did the "remodel" a couple years back we lost about 35% of our storage space....fun times.
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Old 02-18-2016, 08:40 AM   #14
tnpartsguy
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That's how I got my new laser machine. I did a study on operating cost and profit. The old machine was costing about $600/mo to operate (on a $350/mo lease, the rest was cutters, ect). We paid like $9k for the new one (outright purchase) but the operating cost will be about $100/mo for cutters, ect
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Old 02-18-2016, 09:28 AM   #15
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Quote:
Originally Posted by bbdrew View Post
I was at a Honda Dealer previous to GM and we had 30%-40% of gross from our wholesale, we were not large, but had a good business until you looked closer. For that gross we had to dedicate 2 full time drivers, 1 part time driver, plus took up both counter guys phones taking the orders (most wanted that person to talk to). When the parts manager left and I analyzed the information we were so far in the hole that we ended up creating a very strict return policy, most body shops left after that and we shifted the "wholesale parts inventory" to tires and fast moving service parts and we saw a huge jump in profits and a huge decrease in personnel expenses, Happy GM. Be careful in wholesale and analyze all the data and expenses. I can't understand how the big dealers are profitable in wholesale especially since many travel great distance to deliver and have large staff dedicated to wholesale. I maintain what I have now, but am not interested in growing it at all. For a small/medium dealer I have found it's not an effective use of capital or resources.
Quote:
Originally Posted by bbdrew View Post
I normally try to put it in investment terms when talking to owners/GM. CP Service Department GP% = 34-38%, Wholesale GP% = 14-18% (if your aggressive even less and factoring any purchase money it's still 18-24%). If he had 100,000 to invest in two stocks with the returns listed above, where would you focus your investment money. You have to work twice as hard to get the same amount of profits. Then I would break down the total expenses, I've found for our level of business the wholesale expenses are a huge proportion of the total GP, and for Service it's a fraction, Or compare it to a used car (most get it when you talk from the front end). Of course it doesn't hurt to have both service and wholesale, unless your expenses are exceeding your profits, in my case they were so we set up policies to get back in the black and when we did we lost most of our wholesalers, but the company as a whole was better and we reinvested in service and it paid off huge.
That really sucks, do you send them down to the other dealer or do you take them off at your facility and transport them down? You could always try selling him on tires straight from the mouth of NADA about the impact of the tire business. From NADA: 15% of automobiles that come through service Department need tires, of those needing tires 75% will buy from the first that presents prices, of those 75% who buy 78% will have their vehicle maintained in the same place they buy tires. Based on this data, you should be able to calculate the money your losing if you are sending them down to the ford dealer.
bbdrew - Thanks for two excellent posts - you've really added a lot to this thread. Thanks for taking the time to share your knowledge.

I also liked the comment about talking to your GM and using a "front-end" analog. There's no question since most GMs rose through the sales side of the dealership that they'll likely be better able to relate to your idea if you present it with a sales analogy.
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