2015 Auto Accessories Sales Mid-Year Trend Report

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1 2015 Auto Accessories Sales Mid-Year Trend Report A Reynolds and Reynolds Company

2 2015 Auto Accessories Sales Mid-Year Trend Report The New Normal in Automotive Retailing Since the recession, the automotive industry has continued to rebound better and more consistently than most sectors in the economy, with dealerships continuing their pivotal role as the vital link between the manufacturer and the consumer. This year, sales of new vehicles in the U.S. are likely to rise to around 17 million units a level difficult to imagine five years ago. Yet, under the surface, there are pressures pushing against dealers. Lower margins on new vehicles are compounded by higher real estate, marketing, and employee costs; Dealership net profit margins continue to stagnate at around two percent, which is where they have been for the past several years; Gross profit margins as a percent of sales have declined for five straight years; And, looking ahead three to five years, industry sales are likely to plateau or even dip. These pressures also play out against the backdrop of a post-recession era where consumers increasingly expect a different and better retail experience than the one typically associated with a dealership. The expectations are being shaped by millennials, and increasingly it s forcing dealers, manufacturers, and vendors to improve the processes involved in every sales and service interaction. Challenged in this New Normal in the automotive industry, dealers are faced with the dual pressures to manage the customer experience differently and manage profitability more effectively. That s where technology can play a crucial role and offer a solution for dealers both to boost gross profit and to enhance the consumer experience. One proven area of technology is vehicle personalization and accessories sales. By implementing the right sales and marketing technology in the dealership, paired with best practices in selling accessories, dealers can deliver an engaging accessories presentation, enhance the consumer experience, and offer a more personalized vehicle turning the car into my car for the buyer. Equally important, accessories typically deliver 40 percent to 50 percent profit margins and offering accessories to customers can deliver a new profit center for dealers. 2

3 AddOnAuto About This Report: Case Studies in Success The 2015 Mid-Year Accessories Trend Report has been compiled by comparing data from 140 dealers representing 22 vehicle brands across the U.S. These dealers sold $33 million in accessories in the first six months of 2015, with an overall profit margin of 41 percent. Slightly more than 86,000 accessories presentations were delivered across these dealerships, resulting in an average of $400 in retail sales per presentation and $157 in gross profit per presentation. Trend Highlights: Consumers Choose Protection, Convenience, and Utility Protection, convenience, and utility were the themes in accessories sales for the first half of 2015, continuing a strong showing in these categories from At the same time, a new trend emerged in the first six months, with window tinting becoming much more popular for consumers. Window Tint moved up as the second highest volume accessory sold by dealers and into the top five in profit. Overall, Floor Mats continued their rein in first place as the highest volume accessory sold, while ranking lower in total revenue and profit. Alarms, Remote Starters, and Recovery device sales also continued a strong showing in the top five accessories by volume; Factory Exterior products, such as Splash Guards, fell slightly in volume in By Volume By Revenue By Profit 1 Floor Mats Protection Products Protection Products 2 Window Tint Alarms, Remote Starters, and Recovery Alarms, Remote Starters, and Recovery 3 Protection Products Step Bars Step Bars 4 Alarms, Remote Starters, and Recovery Floor Mats Window Tint 5 Factory Exterior Upholstery Body Side Molding 6 Body Side Molding Body Side Molding Floor Mats 7 Step Bars Window Tint Upholstery 8 Roof Racks, Cargo Carriers, and Bike Racks Hitch and Accessories Hitch and Accessories 9 Factory Interior Tonneau Covers and Bed Caps Factory Exterior 10 Hitch and Accessories Dealer Packages Dealer Packages 3

4 2015 Auto Accessories Sales Mid-Year Trend Report Vehicle Manufacturer Accessories Although products unique to vehicle manufacturers continued similar trends from 2014, there is one newcomer in the top five: Touch Up Paint. Consumers bought more Touch Up Paint in the first half of 2015 than in any of the last five years. Factory Exterior Factory Interior Factory Performance 1 Splash Guards Cargo Nets, Organizers, and Protectors Exhaust Upgrades 2 Door Edge Guards Door Sills Superchargers and Air Intakes 3 Touch Up Paint Emergency Kits Suspension 4 Bumper Trims Interior Illuminations Engine Block Heaters 5 Tow Mirrors Steering Wheel and Shift Knobs Shifters 4

5 AddOnAuto Accessories by Region Across the five regions in the U.S., Floor Mats again claimed the top spot as the most frequently sold accessory in each region. Among the regions, the Mid-Atlantic and West regions showed the most change in consumer behavior from 2014 in the accessories purchased. In the Mid-Atlantic region, the Protection Products category moved up to second place in sales, after failing to break into the top five for the region last year. Dealers in the Mid-Atlantic also sold more Body Side Molding in 2015, with that product moving into the top five of accessories purchased. In the West Region, Window Tint moved up two spots to the second most popular accessory sold, likely due to the heat wave and lack of rain. West Region dealers also sold more Body Side Molding, which moved into the top five. In the Midwest, Window Tint also moved into the top five this year. And Southern dealers sold more Alarms, Remote Starters, and Recovery products during the first six months of the year, which helped put this category into the top five. Mid-Atlantic Midwest Northeast South West 1 Floor Mats Floor Mats Floor Mats Floor Mats Floor Mats 2 Protection Products Protection Products Alarms, Remote Starters, and Recovery Window Tint Window Tint 3 Factory Exterior Alarms, Remote Starters, and Recovery Body Side Molding Body Side Molding Factory Exterior 4 Alarms, Remote Starters, and Recovery Factory Exterior Factory Exterior Alarms, Remote Starters, and Recovery Protection Products 5 Body Side Molding Window Tint Protection Products Factory Exterior Body Side Molding 5

6 2015 Auto Accessories Sales Mid-Year Trend Report The Best Dressed Models by Make Toyota again was the most popular brand to accessorize by a wide margin over Honda, followed by Ford, Acura, and Chevrolet in the top five. The Toyota model most frequently accessorized during the first six months was the Toyota RAV4, knocking the consistently popular Toyota Camry from the top spot among Toyotas. Acura Audi Buick Cadillac Top Accessorized Models by Make MDX A4 Sedan Enclave SRX For Audi, the A4 sedan was the most accessorized model in 2015, replacing the Q5 SUV from the top spot in Chevrolet Chrysler 200 Silverado 1500 Crew Cab Chevrolet customers accessorized more Silverado 1500 Crew Cab trucks this year, replacing the Equinox, which was the most accessorized in Chrysler s 200 regained its position as the most accessorized model for Chrysler, compared to Town & Country in Similarly, Dodge Challenger took the top spot this year, outpacing the Caravan, which took the top spot in For the first time in 5 years, the Hyundai Sonata was not the top accessorized model for Hyundai; that honor fell to the Hyundai Santa Fe, which was the most accessorized model in Subaru Forrester moved the Outback out of first place for that brand. The biggest change was the Toyota RAV4, which took the top spot at Toyota and displaced the Camry, which had held the number one position for the past five years. The RAV4 is one more indicator of the popularity of SUV and truck sales in Dodge Ford GMC Honda Hyundai Jeep Kia Lexus Lincoln Mazda Mitsubishi Nissan Ram Challenger F-150 Super Crew Sierra 1500 Crew Cab CR-V Santa Fe Wrangler Unlimited Sorento RX MKX CX-5 Outlander Sport Rogue Ram 1500 Crew Cab Scion tc Subaru Forester Toyota RAV4 6

7 AddOnAuto Changing the Profit Equation and the Consumer Experience in the Dealership Accessories sales are a $40 billion market. Consumers consistently spend heavily on vehicle accessories from floor mats, window tint, custom paint, and trim to remote starter systems, interior illumination, video screens, and DVD players. Not only do nine out of 10 consumers purchase accessories for their vehicles; six out of 10 spend at least $1,500 on accessories. Additionally, the majority of consumers will buy accessories within the first 90 days of purchasing their vehicle and most would prefer to buy accessories at the dealership yet fewer than five percent do. In the past several years, we ve seen the trend for customizing and personalizing vehicles go from niche to mainstream, driven largely by demographics. The accessories market continues to grow and flourish because of it. As accessories continue to gain importance in the eyes of consumers, the opportunity for dealers to capture this profit potential is there for the taking. Dealers who are embracing the right technology and processes to sell accessories in the dealership are increasing gross profit and changing the consumer experience. In the New Normal for automotive retailing, selling accessories is helping to separate the best dealerships from the rest. 7

8 2015 The Reynolds and Reynolds Company. All rights reserved. Printed in the U.S.A /15

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