By Erick Jauregui, Fixed Operations Training Specialist for EasyCare

The parts department is a critical yet often undervalued component of dealership profitability. Adopting strategic measures that can enhance inventory management and help bolster sales through targeted customer service is essential. Here is a comprehensive plan designed to help boost parts gross profits, leveraging market data, inventory control, and interdepartmental synergy. 

Understanding Market Dynamics 
The first step towards profitability: understanding local gross profit percentage and averages. This insight provides a benchmark, enabling dealerships to position themselves competitively. Establishing processes and policies around these metrics can help with maintaining healthy profits. Further, educating parts department staff on these principles is paramount. Training equips them with the knowledge to apply data, preventing profit erosion.

Inventory Management: Tackling Obsolescence 
A common pitfall for parts departments is the accumulation of obsolete inventory. Aged stock occupies precious space and ties up capital. Identifying and addressing this issue will help you deploy this stock more productively. Several different approaches to stock include: 

• Inventory Analysis: Conduct a thorough inventory audit to pinpoint slow-moving items. You can make better-informed decisions by understanding how long parts have consumed valuable resources.
• Return Policies: Explore return options for unsellable stock. Many suppliers offer buy-back programs, which can mitigate losses on unsold parts. 
• Alternative Sales Avenues: Look beyond traditional sales channels. Online marketplaces, direct marketing, and parts liquidation services offer avenues to recoup investment on hard-to-sell items. 
• Inventory Management Systems: Inventory software aids in monitoring metrics, like stock levels of fast-moving items and lost sales opportunities. These tools are invaluable in maintaining operational visibility and agility. 

Leveraging the Service Department: Your Premier Customer 
There is a symbiotic relationship between the parts and service departments. The service department’s reliance on the parts division for timely and accurate parts supplies makes it the most significant internal customer. Ensuring a well-stocked inventory tailored to the service department’s needs guarantees a streamlined workflow. This provides an environment where parts are sold efficiently. Key strategies include: 

Stock Optimization: Align inventory with demand. Focus on fast-moving parts and those with a high turnover rate to meet the service department’s requirements. 

Pricing and Availability: Competitive pricing and immediate part availability can help strengthen the service department’s confidence in the parts division. This enhances the customer service experience. 

The Takeaway
Improving the performance of the parts department requires a deliberate approach to market analysis, inventory management, and internal collaboration. By understanding market dynamics, addressing inventory obsolescence, and strengthening the partnership with the service department, dealerships can unlock significant profit opportunities.

About the Author
Erick Jauregui, Fixed Operations Training Specialist for EasyCare (merged with Relentless Dealer Services), brings nearly 20 years of automotive, powersports and marine service department experience. Erick is focused on training, consulting and creating new fixed ops content to help dealers supercharge their operations. During his career, Erick was certified by several OEMs, with his service departments exceeding gross profit, parts and CSI. Learn more about EasyCare at www.easycare.com.