A PROFIT-MAKER FLYING UNDER THE RADAR

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2 FEATURE A PROFIT-MAKER FLYING UNDER THE RADAR WHY YOU SHOULD BE SELLING CUSTOM-INSTALLED RADAR DETECTION AND LASER JAMMING SYSTEMS BY J.J. LANGGUTH Auto and light truck accessories are a combined $40 billion industry that has been experiencing steady annual growth since the depths of the 2008 recession. Recent studies by Foresight Research show that nearly 50 percent of new car and truck buyers spend an average of almost $2,000 customizing their vehicle. Some customers even spend up to $4,800 personalizing their ride. Unfortunately, those same studies found that 66 percent of new car and truck buyers are not presented with accessory options during the sales process. Adding insult to injury was the finding that the total average accessory spend increases by 50 percent when options are presented during the vehicle purchase process. The bottom line is that many dealerships have let a huge amount of profit drive off their lot. Some manufacturers are grabbing the wheel in this category rather than letting suppliers offer appearance and performance customizing options. One example is FCA US (Chrysler) offering special and limited edition models such as the popular Dodge Challenger with a Shaker hood and Scat Pack performance kit. That move is no surprise, as many invehicle features that were once the domain of the aftermarket backup cameras, security systems, remote starts, navigation systems, etc. were taken over and offered by OEMs. So what s left for you to offer to these accessory-interested customers that the manufacturers don t (or perhaps better stated, can t) offer? Custom-installed radar detection and laser jamming systems. Market and Profit Potential Because this radar and jamming accessory category is something auto manufacturers will never offer, every vehicle on your lot is a potential profitmaking candidate. The market potential for these systems is huge: 50 million speeding tickets are issued annually costing motorists $6 billion in fines. If those numbers don t grab your attention, feast your eyes on this sample of the average profit potential for your dealership of a custom installed radar detection and laser jamming system: Average Sale Price: $2,700 Product Cost: $1,087 Parts Markup of 30 percent: $ Sales / Finance Markup: $600 Service Department Hours: 6 Service Department Rate ($125/hour): $750 Net Profit to Dealership: $1,613 What makes this accessory category unique is that every department Parts, Service and Sales can all profit from it being added to your accessories presentations. And the profit breakdown can be modified to your dealership s requirements or preferences. 58

3 Which Dealerships Are Appropriate You may be saying to yourself, No one has asked for this product in the past. Why should I offer it now? If that question occurs to you, ask yourself this: Did they ask for wheels and tires? Window etching? Gap insurance? Paint protection? Extended warranties? You should sell what makes you money. Because, as you know, although new vehicle sales have been strong, the sobering fact is there is precious little profit in each sale. Sure, it s easy to say luxury, exotic and performance brands should be selling this accessory. Mercedes, Porsche, BMW, Ferrari and Lamborghini are all natural fits. Also appropriate for this product category is any dealership with an Aftermarket Accessory Department. At the heart of what kind of dealership is appropriate for this category is that with 50 million tickets issued annually, it s not a matter of if but, rather, when your customer will receive a speeding ticket. More and more municipalities are using speeding crackdowns as a way to maintain or raise budget revenue. So I suggest presenting this cost / benefit equation to every customer: The average ticket cost of $200 (which does not include attorney s fees or other costs like time off from work, traffic school, etc.) PLUS the average cost for an installed remote radar detection and laser jammer system EQUALS a driver needing only be alerted about 10 times to police radar or laser and the system will have paid for itself. How to Sell Selling installed radar detection and laser jamming systems is best done during the vehicle purchase process. Often, the cost of the system can be calculated into the overall financing and monthly payment. Some dealers find having a demonstrator vehicle equipped with an installed system to be effective in introducing how a speed protection system functions. Others find that a printed, vehicle-specific overview of where system components are installed and what its benefits are will be very effective. ALTHOUGH VEHICLES THAT ARE SPECIFICALLY BUILT FOR PERFORMANCE ENTHUSIASTS ARE A NATURAL FOR THIS PRODUCT, JUST AS MANY FORD F150 AND CHEVY SILVERADO BUYERS ARE CHOOSING TO HAVE A SPEED PROTECTION SYSTEM ADDED AT THE TIME OF PURCHASE. The key to your dealership s success in selling speed protection systems is staying committed to offering this and other appropriate accessories to every customer. Although vehicles that are specifically built for performance enthusiasts are a natural for this product, nearly as many Ford F150 and Chevy Silverado buyers are choosing to have a speed protection system added at the time of purchase, as well. How to Install Once you ve decided on the sales and financing steps, the next consideration whether you are going to perform the installation in-house or utilize an expeditor. Obviously, if you keep it in-house, that means that much more profit for your dealership. However, if your Service Department estimates too many labor hours for each job, you can find yourself priced out of the market. Installing a remote radar detection and laser jamming system requires power and ground connections, placing components and running wires. 60

4 There are no warranty or vehicle operation concerns to be had as these speed protection systems do not access nor are integrated into any factory computer systems or settings. The degree of installation difficulty depends on the particular vehicle, the skill of the installer and the customer s expectations and desires. If you have a Technician on staff with previous mobile electronics experience, that would provide useful insight for these jobs. Regardless of who does the job, however, the ultimate desired outcome should be that it looks like it was installed at the factory. Concerns and Legalities Although this product category can provide a huge new profit stream, there are some considerations you should be aware of. Mostly, this comes down to where your dealership is located. Radar transmitting and receiving devices fall under the jurisdiction of the FCC. As such, the use of installed radar detectors is not permitted in Virginia, Washington D.C., and on all military installations. Additionally, any commercial vehicle over 10,000 pounds cannot be equipped with a radar detector. Canada is stricter on the use of radar detectors; the only providences where their use is legal are British Columbia, Alberta and Saskatchewan. Laser jammer / defuser use is restricted by some states, but very rarely enforced. Error codes on police laser guns are a common occurrence and because most police officers approach speed enforcement as a waiting numbers game, they don t chase down vehicles to inspect them to determine if they are equipped with a jammer that caused the error code. The following states impose certain restrictions on the use of laser jammers: California, Colorado, Illinois, Minnesota, Nebraska, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia and Washington D.C. Choosing a Vendor When it comes to custom-installed radar detection and laser jamming systems, there are two main vendors. Other brands primarily focus on portable models, which do not offer the profitability or exclusivity your dealership needs. Here are questions and some answers to consider when evaluating installed radar detection/laser jammer vendors: What is the vendor s distribution model? Do they sell direct to consumers, sell to big box retailers, or allow Amazon and ebay sales? You want a level playing field and not want to have to compete directly against the vendor and/or other firms with retail advertising budgets. What kind of support does the vendor offer? How fast does the vendor respond? Try them out so you can see what your staff and customers might experience. What vendor(s) do other dealerships you know work with? Why and for how long? Does the vendor offer a training program? Does the vendor offer unique warranty or service terms, conditions, etc.? A good example is a ticket-free guarantee. Often, many dealerships that are considering entering into this category have one main fear risk. Here are the questions you should ask to determine if the vendor alleviates that concern: Does the vendor meet in-person with every department head? Does the vendor regularly perform conference calls to help your team? What is the vendor s commitment to establishing a sell-through program for your dealership? How does the vendor handle product that doesn t sell through? 62

5 What Industry Professional Say Who better to discuss the impact that speed protection systems can have on a dealership than Fixed Operations Department managers experienced in selling them? Let s listen to what some Florida dealership leaders have to say. Julian Bueres, Parts Manager for Porsche of West Broward, feels that speed protection systems are a natural fit for our brand and our customers desire to enjoy their vehicles. I am fully confident that a customer will be satisfied when a radar detection and laser jamming system is installed and that helps solidify a trust-based relationship where other recommendations will likely be accepted. Besides being a great product for the customer, these systems are one of if not the most profitable items our dealership sells. BY CONSISTENTLY FOCUSING ON ACCESSORY SALES AND INCLUDING INSTALLED SPEED PROTECTION SYSTEMS AS PART OF THE VEHICLE PURCHASE PROCESS, YOU CAN SIGNIFICANTLY ENHANCE YOUR DEALERSHIP S PROFITABILITY. Many vendors claim to be a partner, but actions speak louder than words, said John Janos, Parts Director of Ferrari of Fort Lauderdale and The Experience Auto Group. You want to feel like the vendor is an extension of your staff and that they are invested in your success. They should visit and / or call to discuss your business challenges and develop selling strategies, and provide any product updates or training. We recently started offering installed radar detector systems because we felt that the vendor offered everything we needed to be successful, said Kevin Meyers of Lamborghini Palm Beach. When the manufacturer came to our store and explained the profit breakdown by department, as well as the no-risk sell-through process, we were sold. By consistently focusing on accessory sales and including installed speed protection systems as part of the vehicle purchase process, you can significantly enhance your dealership s profitability. In addition, by focusing on accessory sales, you can increase your mind share among vehicle buyers. According to research studies, 40 percent of buyers are influenced to purchase from a specific dealership because of accessories being available there at the time of vehicle purchase. So make sure that these profitable offerings are on your radar! J.J. Langguth is the Director of Automotive Aftermarket for K40 Electronics, a leading manufacturer of custom installed radar detection and laser jamming systems. J.J. has over 18 years of progressive management experience and has established partnerships with dealerships across the nation. 64