Parts counters are helping fuel increased overheads as franchised dealer networks strive to meet manufacturer demands for improvements in the way they look after their customers.

Punitive surcharges on next-day deliveries have prompted most outlets to increase their volume of fast-moving parts, claims the Retail Motor Industry Federation.

“Most car manufacturers operate a stock order facility that guarantees a Thursday delivery on parts ordered the previous Monday. 

Senior operations manager Stephen Latham says: “If you happen to need the items any quicker, you can get them but you’re forced to pay a high price and a heavy surcharge for next-day delivery means you can lose up to 30% of your margin.

“So it’s small wonder that parts inventories are increasing and
costing dealers a lot more to fund.”

It’s not unusual for a medium-size dealership selling 350 new and 500 used cars a year to carry up to £120,000 worth of parts.

Latham adds: “As a former Vauxhall dealer for 30 years, I think I can speak with some experience when I say that dealers are having to cope with demands from two separate areas. 

“On the one hand, there is constant pressure to raise the level of customer satisfaction and on the other, car manufacturers are acutely aware that factors are always ready to take over their parts market.” 

“The result of this is incentives for dealers to buy up to certain target levels – you’ll qualify for extra margins if you take £2,000 or £3,000-worth of brake parts by the end of the month, for example.”

  • Read this story in full in the 5 September 2008 issue of AM. To subscribe to AM magazine click here or call 01733 468659.