After giving his wholesale parts customers deep discounts through price-matching programs and taking a miniscule profit, Charlie Monteleone, corporate fixed operations director for the Ancira Automotive Group, recently discovered he can buy some of his parts cheaper at Walmart than through his own jobber.
It was an eye opener and surely not a warm and fuzzy moment for Monteleone.
“I am a Walmart shopper and the type of guy who will walk down every aisle when I’m there, whether I need something or not,” he said. “If you’re in the business and you see a Mopar or an AC Delco filter, for example, it catches your eye. I compared their prices to our dealer net prices on the exact same filters and 50% of all the parts that Walmart has on their shelves is [12-14%] less than what we can purchase them for.”
Monteleone started his career as a Ford master technician. Today, he is the top guy at Ancira, headquartered in San Antonio, TX. The company, which has 11 locations in Texas, is celebrating its 50th anniversary in 2022.
Ancira offers both mechanical and collision repair services for Chevy, Nissan, Chrysler, Jeep, Dodge, Kia, VW, Ford, GMC, Buick and RVs, and has the largest collision center in San Antonio---45,000 square feet---that employs 55 people and stocks more than $1 million in crash parts.
The Ford Motor Company played a major role in Monteleone’s household during his formative years.
“My father started out as a Ford tech and then worked his way up to become a parts and service director," Monteleone said. "I’ve followed in his footsteps and became a Ford master technician, and my journey has been very similar to my dad’s career.”
The journey now in 2022 is a little different and Monteleone is facing issues Dad never had to deal with. Competing in the dealership world is already tough with tight margins, but throw in the pandemic and the fact people are keeping their vehicles longer---it’s a whole new ballgame. The dealers that are succeeding are...
...thinking outside of the box and adapting on the fly, so when the industry throws Monteleone a curve, he must respond quickly and definitively.
On pace to do $31 million in wholesale parts sales this year, Monteleone admitted problems within the supply chain have impacted his business tremendously.
“We’re feeling it and the shops are definitely feeling it even more,” he said. “Right now, my repair fill rate off-the-shelf is 70%, which is not horrible. Our pre-pandemic numbers were around 85% with our same-day at 94%. We’re doing a lot more major repairs because people are not buying new vehicles during the pandemic, and the availability of parts has been an ongoing concern.”
To get the parts they need for their in-house repairs as well as for their wholesale clients, Monteleone’s parts managers have had to hustle and leverage relationships to succeed.
“My parts people are very active, going dealer-to-dealer or getting the manufacturers to approve the use of aftermarket parts on warrantied repairs," Monteleone said. "We’re winning doing it that way, but I always tell my parts managers that they have to be on their toes and be really, really focused on their work in process.”
With his OEs' warehouses located in Dallas---4.5 hours away by car---Monteleone obviously can’t rely on them to complete his parts orders. But luckily there are several competing dealerships selling the same brands in close proximity, he said.
“We source them for anything we don’t have on-hand and when we recondition used cars, we always now opt mainly for aftermarket parts on those jobs.”
Acquiring parts from the competition means...
...Monteleone is paying premium prices, which impacts his bottom line.
“From our neighboring dealerships, the going rate charge is cost plus 15%, which is a premium price and a little steep,” he said. “If you’re selling the part to one of our wholesale shop customers, we’re already giving them a deep discount. So, we are taking a real beating on those orders and selling those parts at a loss. Serving the customer is our priority here, and this is one of the realities we have to deal with.”
In today’s wholesale parts world, the contenders are separating themselves from the pretenders, a trend that will continue, Monteleone said.
“The differences between a parts manager who is a strong retailer and focusing on profitability versus someone who is slinging a lot of paper to sell at a high volume are becoming more and more evident," he said. "We definitely want to be on the right side of this and that’s why we work so hard to be keep our wholesale customers happy while being profitable overall.”
What’s the solution?
“I can buy the parts from Walmart and make more money, so that’s what I did,” he said. “I made a big purchase and when my factory rep came in for a visit, she was surprised and a little perplexed to see a wall of parts I bought at Walmart. I told her I won’t be buying certain parts from you anymore because I can get them cheaper at Walmart. She didn’t know what to say! I originally discovered this a few years back in Florida and the same thing is happening now in Texas.”
Right now, Walmart isn’t retailing crash parts and is focusing on marketing DIY types of parts. But no one would be surprised if this trend could gain momentum in some states to the point where certain collision parts and products could be undercut by large retailers.
“The OE wants to cut out the middle man and eliminate the jobbers, to be honest,” Monteleone said. “They all want to go direct and that’s why they’ve done things like cutting their return allowances in half, for example. Why are we selling our parts at a deep discount while the manufacturers have decided to work with Walmart? It makes no sense.”
Ed Attanasio