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Retail or wholesale?

October 28, 2009
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Since the emergence of the retail market for detailing services in the 1980s, a controversy has arisen in the industry whether a detail business should or could profitably continue to do wholesale work for the auto dealers at lower prices than they would receive from the retail customer.

A case for dealer work

Those who advocate for dealer work take the position that it is steady, guaranteed paycheck. Furthermore, they argue it is less costly for several reasons:

· Employees are more productive, consistent and motivated because all cars receive the same service and want to complete as many cars as possible per day.

· You do not need a fancy facility; a garage, warehouse, or lean-to is all that is required.

· Likewise, you do not need to worry about your employees’ appearance or deportment because they most likely will not be in contact with the dealer.

· You do not have to advertise because you only have to depend on one or two dealer contracts.

A case for retail work

Many operators of retail-oriented detail businesses simply will not do dealer work, even if the dealer comes to them. Why do they take such a strong position against this type of work? For several reasons involving a combination of profit and emotion:

· The gross profit per car is less for dealer work than retail services.

· Retail vehicles are typically in better condition and the customer is generally more positive about the end results of the detail service.

· You are able to hire a better quality staff because you do less cars at higher revenues.

· The loss of one customer or two will not break your business in the same way losing a dealer contract would.

· The retail market is bigger and has great potential for growth.

Thoughts on retail vs. dealer work

If I were operating a detail business again I would lean toward the retail position for most of the reasons presented. However, I would keep my options open. We always contracted with a few dealers daily, looking for any overflow that would bring us an additional $100 to $200 per day in revenue.

My advice to the detailer today is to never displace retail work for dealer work, but instead leverage it as a supplement on days when retail business is slow. Use it to give your part-time employees more hours.

Dealer work can also be used for training new employees since every car is a complete detail service. Care has to be taken in final inspection; however, to be sure the work is done to the dealer’s exacting standards.

Enter the full service detail shop

In order to straddle these two markets, you should consider what I call the “Full Service Detail Shop.” By focusing on the key services needed by dealers, you can offer retail customers and dealer accounts a full menu and appeal to both markets.

These services include:

· Complete detail;

· Paint touch-up;

· Undercoating;

· Pin striping;

· Door edge guard;

· Body side molding;

· Windshield replacement;

· Windshield crack and chip repair;

· Vinyl top dyeing and repair;

· Exterior trim painting or restoration;

· Interior vinyl and leather repair and dyeing;

· Dash repair and dyeing;

· Fabric upholstery dyeing and repair;

· Carpet plugging and dyeing;

· Carpet replacement;

· Paintless dent repair; and

· Carpet dyeing and recoloring.

By focusing on these core services, you would offer a convenient, “one stop shop” for the dealer, and also the retail customer. Your business would offer one delivery, one billing, and one company to deal with, and probably a much faster turn-around, getting the car on the lot for resale faster.

From the detail business owner’s point-of-view, revenues per car are substantially increased without a major increase in operational costs. In fact, by quoting the dealer a total price to recondition a vehicle, the detail shop operator can hide an increase in the price of the detail by several more dollars.

The benefit of offering these services to your retail customers should be quite clear; you have the perfect opportunity for add-on sales and revenues. Keep in mind that extra services like the detail itself will sell to retail customers for more than double or triple what the dealer will pay you.

Consider the menu

Let’s look at these various services, what they are, and what it may cost to provide them:

#1 Detailing: This is your core service. Upgrade to the latest equipment innovations to increase your productivity and provide more training for your employees to improve quality.

#2 Paint touch-up: Use a sophisticated airbrush method. Purchase a paint touch-up system (cost: $10,000 with training necessary) that provides the ability to mix over 60,000 different paint colors for U.S, Japanese and European cars.

#3 Windshield crack and chip repair: Kits vary in price from $300 to over $6,000 depending upon the type of system and supplies that are included. All include some type of training either on-site or through video.

#4 Complete interior repair: Novices in the business can buy complete kits (cost: $3,000-$4,000) with everything needed to perform all these services, including dyes, glues, paints, tools, supplies, and training.

#5 Paintless dent repair: PDR is a complicated skill that only certain individuals can master. It takes weeks of training and months of practice to master this skill. Consider brokering the service or hire a person already skilled in PDR. The cost of tools and accessories can range from $1,500 to $3,000, and training can run up to $1,000 per day.

#6 Carpet dyeing and recoloring: Systems now on the market ($1,300) feature water-based dyes that are color matched to the main automotive carpet colors. All one has to do is match the color for recoloring or use a darker color to change the color.

#7 Gold plating: Although it is dwindling in demand, you will find some dealers need this service for luxury vehicles. Systems run from $1,500 to $3,000 depending upon the sophistication, supplies and amount of gold solution included.

#8 Invisible film protection: You can purchase pre-cut kits for around $150 or buy the film in rolls and cut yourself. Suppliers of the film can provide the training.

#9 Undercoating: This requires a lift ($2,000-$4,000) as well as application equipment: a pump gun, spray nozzle, and filter ($1,250).

#10 Pin striping: You will need vinyl tape in a variety of colors, widths, and designs, as well as a hot air gun and supply of adhesive remover to take off old striping and adhesive residue.

#11 Body edge guard: Requires an inventory of different sizes colors and types of molding. Training available.

#12 Windshield replacement: Requires an individual trained in windshield removal and replacement. Some tools are required. Windshields can be purchased from the dealer, a wrecking, or glass company on an as-needed basis.

#13 Vinyl top repair and dyeing: We are not advocating you totally replace vinyl tops, but simply repair small tears. The dyeing is very simple. Latex paints are available that can be sprayed, brushed, or rolled on, and dry streak-free.

#14 Exterior trim painting and restoration: Most newer cars sport black or grey rubberized bumpers and trim, and many, after exposure to the sun’s ultraviolet rays, fade. They can be renewed with a simple latex paint designed specifically for this purpose. Paint is also available to restore side mirrors that are subject to rock chipping. Requires only a small inventory of paint.

R.L. “Bud” Abraham is president of Detail Plus Car Appearance Systems, Portland, OR, and a nearly 40-year member of the car care industry. He is also a member of the Western Carwash Association Board of Directors.Abraham can be contacted at buda@detailplus.com.