One can’t walk into the showroom at Toyota of Escondido (Calif.) without noticing the olive-green FJ Cruiser — outfitted with a rooftop tent and intake snorkel — parked in the middle of the floor. Curious customers seated in the dealership’s lobby get up from their seats to walk around the vehicle. They check out the knobby, off-road tires, stare up at the tent and peek through the FJ’s windows for a glimpse of the leather interior and the refrigerator/freezer in the cargo area. Clearly, this is not your everyday SUV.
The outdoor-ready FJ Cruiser has been on the Southern California dealership’s show floor for nearly four weeks, and this scene has played out repeatedly in front of Tom Belt, the general sales manager. His office, which he refers to as the “fishbowl” because of its 180-degree view of the showroom, has given him a front-row seat to all the action.
“I was amazed at what a magnet it was. People would come and start looking at it,” he says. “We didn’t have any pricing on it. It wasn’t for sale, but it did draw a crowd.”
The fully equipped FJ Cruiser is undoubtedly eye candy, but it’s practical enough for any outdoor enthusiast. The accessories are part of a ready-to-assemble equipment package called the XPLORE Adventure Series. It was created by Venchurs, an Adrian, Mich.-based packaging, kitting and supply-chain management company.
Australia’s ARB 4x4 Accessories supplied the two-man, rooftop tent and metal access ladder, as well as the snorkel air intake and front and rear bumpers. XPLORE-inspired aluminum wheels, BFGoodrich all-terrain tires and a MagnaFlow stainless steel exhaust round out the exterior. On the inside, the vehicle touts an XPLORE-branded leather-and-suede interior provided by Montebello, Calif.-based Katzkin, a dash badge and floormats with embroidered XPLORE logos.
In March, Toyota of Escondido became the first dealership in the United States to carry the XPLORE Adventure Series, which offers equipment packages for several makes and models. Belt agrees it might not be for every market, but says that’s not the case for his market, which sits 30 miles north of San Diego.
“This place isn’t like San Diego. There’s a lot of outdoor activity going on here, and lot of our customers like to bike ride, camp and fish,” Belt says. “Although I wouldn’t be surprised to see one of these tents in downtown San Diego.”
Accessories Equals Profit Potential
Profit margins remain tight in the post-recession economy, and the specialty automotive parts segment is no exception. The aftermarket industry recorded $28 billion in retail sales in 2009, but there has been a steady decline in volume since 2007. That year, sales peaked at $38.11 billion, according to the Specialty Equipment Market Association’s 2010 Annual Market Study. And since 1999, franchised dealerships have watched their share of the accessories market fall from 10.9 percent in 1999 to 5.3 percent in 2009.
A new study provides some hope that dealers can reverse this trend. Conducted by the SEMA and Auto-Pacific, the study, “Influence of Accessories on New Vehicle Sales,” shows that accessories influence more than 1 million new-vehicle purchases each year. They also help reinforce customer satisfaction.
According to the study, one-third of “non-modifiers” (consumers who have not modified a vehicle in the past) surveyed said they’d be interested in buying accessories if they’re available at the time of purchase. Additionally, 65 percent of respondents said they were influenced by a customized vehicle they saw displayed in a showroom. “Accessorization can influence new-car shoppers to choose vehicle platforms that are accessory-friendly and even influence shoppers who do not actually accessorize their vehicles,” the report stated.
This finding illustrates the benefits of having an in-vehicle display like the one at Toyota of Escondido. “When it’s sitting there, people’s eyes light up when they see the tree house,” says Ron Flint, XPLORE’s program director. “You can convert that into a sale.”
And as Belt says, it’s all about incremental business. “[Customers] may not buy that particular package on the FJ, but they might buy the vehicle or another one of our SUVs,” he says. “I’m not looking to sell hundreds of these a month. It would be nice if we could, but it’s really about doing anything we can to move that profit needle.”
Preparing for the Aftermarket Industry
Belt also sees the XPLORE program as an opportunity to showcase the capabilities of his parts and service departments. As he says, when it comes to selling accessories and customizing vehicles, Toyota of Escondido has the resources, tools and experience to make it happen. “There’s nothing an outside vendor can do that we can’t do in house,” Belt says.
The dealership sits on a 12.5-acre lot with a separate 35,000-square-foot new-car facility and a 25,000-square-foot new-truck and pre-owned facility — each touting its own two-story parts warehouse. The dealership also maintains separate service centers for cars and trucks. The car service area is equipped with 50 service stalls, while the truck center boasts 20 heavy-duty stalls that can accommodate a full-size Toyota Tundra.
The dealership started customizing trucks and SUVs with outside vendors in 2005, then moved the work in house in 2009 once management realized it was more lucrative. “A lot of people were coming into the parts department and buying accessories after the fact,” Belt says. “We started putting [customized] vehicles up front and letting people see what they look like. It caused a lot of excitement and created sales.”
Pre-recession, Toyota of Escondido sold 450 to 500 new vehicles and 220 to 250 used vehicles per month. Those monthly averages have fallen to 175 new vehicles and 120 used, but Belt says sales volume continues to improve month over month. “We’re starting to see signs of recovery. We still have some challenges ahead, but we’re showing forward progress,” he says. “[Working] one car deal at a time and exciting stuff like [the XPLORE program] will get us ahead of the competition.”
One reason for Belt’s confidence in the dealership’s ability to sell the XPLORE packages is its strong relationship with Toyota Financial Services. Currently, 90 percent of the store’s business goes to the captive lender. Belt says funding for any deal with an accessories package will be evaluated on a case-by-case basis, especially since he can’t anticipate how TFS will view the value of certain accessories, such as the rooftop tent. He expects that consumers interested in the XPLORE packages will likely need credit scores of 720 or higher to qualify for the best rate with TFS.
Going Green for the Environment
The XPLORE packages are designed for new vehicles, although the company can accommodate dealers who want to outfit used vehicles with the add-ons. Pricing depends on the make and model, and that packages aren’t explicitly endorsed by manufacturers. However, the packages won’t disrupt a vehicle’s warranty, according to Jeff Wyatt, president and CEO of Venchurs. “I think the upside for an OEM is we’re giving the dealers the tools to sell more cars,” he says.
To encourage drivers to make use of the accessories, XPLORE includes a one-year National Parks and Federal Recreation Lands Pass, providing buyers with free access to all federal recreation sites. Venchurs also will contribute a donation to the National Park Foundation — the charitable partner of the National Park Service — with every kit purchase. Adding major brand gear and accessories will also trigger an automatic 2 to 5 percent donation to the National Park Foundation.
The partnership with the National Park Foundation, which took nearly a year to solidify, is part of XPLORE’s campaign to promote outdoor recreation and environmental awareness. “There’s an authentic message underpinning this whole thing. It’s not just a whole bunch of parts and an identity,” Flint says. “It’s about environmentalism. It’s about the outdoors. It’s about family. These vehicles can deliver you to adventure.”
Marketing to the Outdoor Enthusiast
The message of outdoor recreation and adventure is one that Toyota of Escondido is very familiar with. The dealership’s “Action Sports” division is an active supporter of the supercross, motocross and freestyle motocross (FMX) sports. The store currently sponsors San Manuel/Yamaha rider James Stewart, Monster/Pro Circuit rider Dean Wilson, and FMX rider Jeremy “Twitch” Stenberg.
“We can take [the XPLORE vehicle] and our truck displays to events and get a lot of attention from it,” Belt explains. “Anything we can do to draw attention. This is something that makes us different from the other Toyota dealers in San Diego.”
Belt says the dealership’s past sponsorship efforts have yielded an average of 20 to 25 car and truck deals per month, so he expects the XPLORE vehicle to create similar interest and results among consumers. “This is the type of program where you don’t know where it’s going to go,” he says. “But when you’ve got salespeople embracing this before we have it available ... it’s contagious when they’re showing it to the customer. This is fun stuff.”
Sidebar: Have You Seen Our Catalog?
XPLORE offers three levels of accessory packages ranging in price from $2,000 to $9,000. Stage 1 equipment must be installed by a restyler in Katzkin’s network, but the extras included with Stages 2 and 3 can be installed in most dealerships’ service departments.
Stage 1: XPLORE’s entry-level package includes leather and suede interior, a dash badge, an exterior metal badge and optional floor mats.
Stage 2: This package adds all-terrain tires, aluminum wheels, shocks and a stainless steel, cat-back exhaust. This kit is currently available for select models of Toyota, Jeep, Chevrolet, Dodge, GMC, Nissan and Ford vehicles.
Stage 3: Available for the Toyota FJ Cruiser, 4Runner, Tacoma, Tundra and Sequoia, plus the Jeep Wrangler and Wrangler Unlimited, the high-end package adds a variety of accessories from ARB. Price depends on the number and type of accessories selected.