Top 10 Best Practices for Car Dealer Parts Departments

In today’s competitive auto retail environment, an effectively optimized parts department is a powerful and often underlooked path for dealerships to generate additional revenue and higher profit margins. As the margins on new car sales continue to fall, dealerships must consistently explore opportunities to drive profits and improve customer experience. An efficient and well-managed parts department is a hidden strategy that many managers overlook to improve overall dealership operations.

An effective parts department must drive new revenue and profit while also providing a good customer experience and enhancing the overall perception of your dealership. Below you’ll find 10 strategies proven to help car dealerships operate effective and profitable parts departments.

#1) Buy Parts from Other Dealers. Of course, all new car dealerships will buy parts from the auto manufacturer. However, consider also buying parts from other dealerships, which are often available for as low as 30 cents on the dollar. Finding a discounted source of parts can greatly improve gross profit.

#2) Avoid Discounting Parts. Many dealerships are not sufficiently serious about tracking and enforcing profitability in the parts department. Dealership owners should require parts managers to sign off on all discounts and parts managers should be required to run a price override report daily.

#3) Offer Competitive Prices on Common Parts. Typical customer perception is that OEM parts are more expensive than common alternatives. Your parts department must work to counteract this perception by offering competitive prices on the most common parts such as oil filters, brake pads, and tires. These are the parts where customers are most likely to shop around.

#4) Improve Efficiency. Dealership owners and managers should ensure that the parts department and team work closely with service technicians to develop operational efficiency and avoid common time-wasting processes. For example, make sure to stock fast-moving parts where service techs can easily access them and provide walkie-talkies to service technicians to call parts personnel.

#5) Sell Parts Online. In today’s digital age a dealership’s entire business needs to be online, and this includes the parts department! Dealerships should develop an online parts store and invest in marketing strategies such as search engine optimization and pay-per-click marketing to drive online sales.

#6) Accessory Sales. Your departments should always be working together to leverage upsell opportunities, including within the parts department. Vehicles in your showroom should feature parts and accessories with prices that include installation. Waiting areas and parts retail areas should all be considered opportunities to offer new parts to customers.

#7) Focus on Quick Lube. Your Quick Lube service is a critical path to common parts upsells including air filters, wiper blades, light bulbs, batteries, and more. The parts department manager must be monitoring the Quick Lube process and sales outcomes to drive continued growth and profits.

#8) Track Lost Sales. Lost sales often occur because a specific part that a customer wanted or needed was not in stock. Every time a sale is lost due to this issue, the parts counter worker must record the loss so that your dealership can stock the needed parts and avoid missing sales in the future.

#9) Parts Inventory. It is critical to know what parts are in-stock and your physical inventory must match what you have in your dealer management software. Your parts team must perform a daily inventory to keep track of what you have and what’s needed.

#10) Special Order Parts. All special order parts must be prepaid by customers before they are ordered by your parts team. This will help to reduce inventory obsolescence, as many dealers have thousands of dollars of now obsolete parts sitting on their shelves. The parts department must contact the customer as soon as each special order part is in stock so they can pick it up.

These 10 best practices will help your dealership create more profit from parts sales and will ultimately make your dealership more competitive and more efficient. If you’re looking for more strategies on optimizing dealership performance across all departments, contact Max Zanan for a free consultation today.