New Car Dealer Closings Is it a silver lining or a forecast for part supply problems?

New Car Dealer Closings Is it a silver lining or a forecast for part supply problems?

There has been recent celebrations by some in the aftermarket over the closings of General Motors and Chrysler dealers. But, they really need to step back and realize the true implications of these closings to shops. Many shops are starting to notice some of their new car dealer part sources answering their phones “(insert dealer’s name) used cars.” Even at dealerships not slated to close, inventories are not too deep and it is becoming difficult for them to find parts in “the system.” For small- to medium-sized towns that have lost or are losing dealers, it is big deal to shops. They have lost a vital parts source needed to keep their customers on the road and their shops profitable

Recently, I talked to a shop owner in a small town in west Texas who lost its local Dodge dealer. He was installing a new hydroboost unit on a 1999 Dodge Ram truck and could not figure out which way a clip should go. He said he would usually call his “buddy” in the parts department and they would look at the parts books and help him or tell him where to look on the Chrysler repair information website.
He said that his shop spent around $7,000 last year with the dealer. Now the closest dealer was 200 miles away and he does not have a “buddy” in the parts department.
You maybe asking why I am  shedding a tear for the dealer? Are they not our biggest source of competition? I am not saying their lose is not our gain, but shops have lost a vital parts source they needed keep customers on the road — parts local jobbers and warehouse should start thinking about stocking.
Some parts suppliers focused on “fast moving” parts like filters, brake pads and water pumps seemed the happiest at some dealers’ downfall. Unknowingly, they are one of the greatest  supporters of new car dealers by training their counter staff to say “you are going to have to go to the dealer for that.” The reality is lines of those parts are offered by the aftermarket, it is just that they choose not to stock them. They will probably not be getting any of the $7,000 in annual parts sales from the west Texas shop.
Part of the problem is many warehouses and jobbers do not want to stock a “slow moving” line with many part numbers that might take up shelving space or count against them on their balance sheets. Also, with the current credit market crisis, many smaller warehouses and jobbers can not get loans or credit with the manufacturer to stock an inventory.
But, shops and drivers need “slow moving” parts yesterday. The longer a shop has to wait for  parts, is time a vehicle may be clogging up a bay. In my opinion, the current parts supply chain and shops can not take too many more new car dealership parts department closings. I am already hearing stories of shops waiting on parts for days, and consumers complaining not having a car or driving their car in a less than optimal condition.
I have gone to the AAPEX show in Las Vegas  for the past eight years. It is amazing to see what  manufacturers are making that were previously “dealer only” exclusive. I have seen complete lines of wheel speed sensors, ABS modulators and air ride struts. Some exhibitors are even the original equipment supplier, looking to get into the lucrative aftermarket.
Everybody is looking for the signs of an economic recovery. Some people in our industry saw the announcements of new car dealerships closing as a cloud with a silver lining. But, before parts suppliers remove their rain coats and go out to jump in puddles, they need to look at how the loss of new car dealer parts departments impacts their customers, the shops. There is an opportunity here for jobbers and warehouses to keep their customers healthy and buying parts, but they have to be willing to take a chance on stocking some lines.

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