With boat and motor sales down due to the Great Recession, more and more dealer emphasis has been put on parts sales and service work. It has certainly kept many dealerships alive over the past couple of years. When I owned a new car dealership, the parts and service departments were significant profit centers for my business. I learned early in the car business, about a term, “Service absorption rate.” It might still be used today. Service absorption rate is the percentage of the total dealership’s overhead that can be absorbed by profits from the parts and service departments. Top car dealers in my day could absorb as much as 70 to 90% of their total overhead from profits generated by these departments.

Certainly, dealers in this seasonal boat business can’t expect the same “Service absorption rate” as new car dealers. But there is no question parts sales have been, and will continue to be, significant profit centers for marine dealers. And maintaining a good parts inventory affects not only parts sales and profits, but also the productivity of the service department. A major repair can be delayed simply by not having the right part or parts on hand.

A good, well-managed parts department is an integral and vital part of any marine or auto dealership. And how well a parts department and its staff perform greatly determines how customers will perceive a marine dealer. Over-the-counter customers expect parts department personnel to know or to be able to quickly determine which parts are needed for specific DIY repairs. Equally as important is how the parts department staff handles customers. How they greet customers, their overall appearance, attitudes and basic communication skills are essential elements in keeping customers satisfied and coming back.

Soon after becoming a Chevy dealer, I quickly learned the following tips on boosting my parts department sales and profits. Continue reading Tips on boosting parts sales – part I →

After owning my Chevy dealership for only a couple of months (purchased after I retired from the corporate world), I had my parts department staff take a complete inventory. Much to my surprise and dismay, there had been significant slippage in the total inventory value. It was worth quite a bit less than it should have been.

A few months earlier, during the process of buying the dealership, I had arranged for some auto parts professionals (parts department personnel from a couple of nearby Chevy dealers) to do a complete inventory of the parts department. I wanted to know exactly what I was paying for. It proved to be a good thing, too, as the actual value of the inventory was considerably less than what the selling dealer had listed on his books. And we learned there were a number of obsolete and slow-moving parts that the pros recommended I not only exclude from the dealership overall purchase price, but consider pitching out. Based on their input and reduced parts inventory value, the overall purchase price of the dealership was reduced to reflect this difference.

Now, just a few months later, the inventory value was again dramatically lower. Furthering my concerns, the parts manager reported in a staff meeting that when he or his team would go to pull some parts for over-the-counter sales or in-house service work, sometimes the items were not there even though the computer listed them as available. I decided then to start a quiet but intense investigation to see why the parts inventory dollars were not what they should be and why parts were missing when the computer inventory showed them in stock. Continue reading Keep Your Parts Inventory Safe →