Conventional wisdom says that when wholegoods sales go down, parts sales go up. Or does it? Earlier this summer Don Van Houweling, owner of Van Wall Equipment in Iowa, told me contrary to popular belief, that’s not actually true. “One of the things I’ve learned over all my years of doing this was — most people don’t know this — as wholegoods volume goes down, parts volume usually goes down right with it. They’re in a linear graph. So, if wholegoods goes down 20%, parts goes down 20%,” he says. (Van Wall Equipment is the Farm Equipment 2016 Dealership of the Year. You can read more here.) He went on to say the idea that when farmers aren’t buying new equipment, they are fixing it and thus buying new parts is one of the most misrepresented ideas out there.
Chad Bruns, corporate parts manager at Van Wall, adds that farmers are more conservative on the parts side, too, when the economy is down. “They only purchase what they have to. They run things longer. So, there’s less tendency to buy a new set of openers right now then if they had $5 corn. Then they’d probably go ahead and buy the openers for a planter and fix it up right now.”
I’m interested to hear what other dealers have to say about this idea. Has this been true for you? And if so, what are you doing about it? Van Houweling says, so far this hasn’t been a problem for them because the dealership has what he calls a “service backbone,” which has helped Van Wall achieve 100% absorption.
Whether you prescribe to this notion or not, there’s no doubt the importance your aftermarket business plays in the overall success of your dealership, particularly when wholegoods sales maybe struggling. Now more than ever it’s important to have service programs in place to ensure your shop is full year round, and to have parts staff upselling (when oil is purchased, recommending the appropriate air filter, for example.) What’s working best for your dealership? Share your thoughts in the comment section below.