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Parts Help Keep Dealership Profitable

As the declining economy continues to rock the RV industry, a dealership in western Montana is relying more than ever on its successful parts department to help the bottom line. The secret, says the management of Bretz RV & Marine in Missoula, Mont., is making the dealership a destination, not just a sales lot.

“When we first opened the store in 1999 here at this location, (co-owner) Mark (Bretz) wanted to make it a destination dealership and we started advertising on billboards as far away as Billings and Coeur d’Alene that we had 79-cent (per gallon) propane,” says Brandon Bretz, parts manager and Mark’s nephew. “It does bring a lot people through the door. One of Mark’s sayings is that ‘activity breeds activity’ and it seems to have that effect.”

Picking Products to Draw in Customers

Although the price has crawled up to 99-cents per gallon, it’s still a popular draw for the 42-year-old, family-owned dealership. Mark Bretz, whose parents, Frank and Vi Bretz, founded the store at a leased service station in the late 1960s, admits the propane promo isn’t a moneymaker, but not every service necessarily needs to do so.

“The propane is just one example of that. I think that there are other things that we do that you might look at and say, ‘Gee, it’s hard to justify that.’ When you add it all together, it makes a lot of sense,” he says. “When I visit other dealerships, if there’s no customers in the place, and there’s a big, cavernous building with no music, it’s just pretty uninviting. I believe that you need to have activity to make people think it’s OK to spend money here.”

Of course, customers don’t drive 200-plus miles just for cheap propane, even in Montana. So what else drives people from across several western U.S. states and a couple of Canadian provinces to buy at Bretz?

“Price on products and selection,” Mark Bretz says. “That’s kind of one of those things that, as you grow, it becomes easier and easier to accomplish. You tend to be able to negotiate better deals with manufacturers, which you can pass through to customers. Because you’re selling more, you can stock more and show more to people, so those two things will feed on themselves.”

Brandon Bretz oversees a 3,000-square-foot parts store and up to eight employees during the summer, when a staffer is added to assist with the propane promo. Part of being a destination for RVers means Bretz RV, which is spread across 40 acres alongside coast-to-coast thoroughfare I-90 and employs 55, must offer a variety of items at a good price.

“We try really hard to stock the popular parts that are able to get our customers on the road quickly. We work with distributors that give us access to next-day parts to make it very easy for somebody who’s traveling through to wait a day in Missoula. There’s lots to see and do here,” he says. “We provide overnight parking for our service customers so if there is a part that we need for their coach that we don’t have, there’s a spot for them to park and stay the night and we can usually have it the next day.”

Unlike many urban, and even some suburban, dealerships, Bretz RV isn’t located anywhere near a Camping World (the nearest store is in Tacoma, Wash.). Still, Bretz, who’s managed the department since mid-2005, keeps tabs on his big-box competitor.

“We do run into Camping World’s website once in awhile, more often than I’d like to, but we’re pretty competitive. If you factor in their shipping costs to have something shipped to Missoula for our customers, it’s about the same. If it means losing a deal, we oftentimes match prices and do what we need to do to keep the customer’s business here.”

Popular items in Bretz’s inventory are Yamaha generators and Pullrite towing products, which is not surprising considering 80 percent of the 800 units Bretz RV delivered last year were towables. Another fast-moving item, and the highest revenue-generating SKU, is the Surge Guard line of surge protectors.

“We had one customer who had bought four motorhomes from us in a period of a couple of years,” Bretz says. “He had a coach that he plugged into some bad power and basically toasted everything, including his Norelco razor on the bathroom counter. We got to doing some research on it.

“When my dad (Dave Bretz, sales manager and co-owner) and my grandparents started RVing, they came back and special-ordered some for their units. It wasn’t something we were stocking and this all kind of happened at about the same time. We figured if Dave Bretz was going to run a surge protector on his fifth wheel, then we probably should encourage all our customers to do it. I can think of about five customers who would’ve saved about $100,000 combined if they had one,” he says.

DMS Increases Dealership Effectiveness

From the back-office perspective, Bretz says his department, which contributed six percent to Bretz RV’s undisclosed total sales last year, would be impossible to run without Integrated Dealer Systems (IDS) software. Bretz RV is one of the company’s earliest users and first installed it in 1993.

“IDS has been working really well. We just installed the new service scheduler. We’ve been up and running with that for a couple of months and really getting comfortable with it,” he says. “Because of it, we’ve started using the dealer options to write the sales work orders and in the last year, we’ve really started using IDS more the way it’s designed to be used and less the way more dealers use it.”

That distinction is critical, says Bretz, who doubles as the dealership’s IT manager, because the software requires dealers to develop processes around it rather than making it conform to existing procedures. He’s also excited about IDS features designed for the parts department.

“The special order functionality allows us to special order parts for customers. They pre-pay for them and we are able to then separate from the rest of our inventory what’s in stock for special orders for customers versus what’s here to put on the shelf. It gives us a better way to manage our inventory,” he says.

The dealership’s website hasn’t yet had a big role in the parts department, he says, as Bretz’s bread-and-butter customers enjoy shopping at the store. Yet the site, which details many of the 650-plus towable and motorhome units onsite, has been notable in recent times for one thing: it’s frankness. In the wake of a recent West Coast manufacturer’s bankruptcy, the Bretz RV homepage headline read: “Monaco Files Chapter 11, we have one new Diplomat 40 SKQ left! Discounted $94,000!”

“In today’s world, both legally and morally, we can’t sell those motorhomes without disclosing that to somebody. We’ve got to tell them, so why not make the best of it by saying, ‘Hey, here’s your opportunity’?” says Mark Bretz. “Alfa was one of the first companies that went down and we had five of those things sitting here the day that they decided to quit business. We hadn’t sold one for probably six to eight months. We sold all five of our Alfas within 30 days with a similar approach. We obviously lost money on them, but the company’s out of business. RVs don’t become collector’s items. My thought was you just take the loss and get on with your life; the sooner the better.”

Financing a Continuing Concern

Surprisingly, though, seeing some of the industry’s big names go under isn’t Bretz’s biggest concern.

“Probably the thing that frustrates me more than anything is you’re seeing some lenders refuse to finance products for manufacturers, new or used, that are out of business,” he says. “My argument is that I don’t understand why it’s more risky to finance a seven-year-old travel trailer that was made by Fleetwood than a seven-year-old travel trailer made by anybody else.”

Dealers seem to be getting misinformation, according to Bretz, who in mid-March was part of a conference call between Fleetwood and Bank of America executives who maintained their relationship was still healthy.

“The next day, I get a letter from Bank of America saying, ‘We’re no longer going to finance new or used Fleetwood products forever.’ I actually sent an e-mail yesterday to the people who were on that call saying, ‘This letter is not in the spirit of what I heard on the call. Are you guys out of touch or were you lying to us?’” he says.

“One of my concerns is I know BofA was significantly involved in Fleetwood, I know they were significantly involved in Monaco, I know they’re significantly involved in Lazydays RV. How many of these things have to go bad before they say, ‘You know what? We’re not interested in anything that says RV.’ I think that’s a concern.”

March also saw some of the industry’s biggest lenders, namely Bank of America and Bank of the West, greatly tighten their guidelines for RV and marine loans. Bretz says the move seems ill-timed. “I think it got excessively easy and now it’s probably excessively hard, but the pendulum never exactly stops where it should stop, so hopefully it will come back a little bit,” he says.

Dealership Benefits from REDEX Relationship

So while the market has softened sales of its Newmar, Itasca, and Keystone products, Bretz RV is still able to save some money through the dealership’s REDEX RV partnership. The well-known cooperative has a special place in Bretz’s heart, as he’s one of the founders. He admits the basic idea of multiple dealers joining forces to buy products at a discount is difficult in good economic times, but it’s a perfect strategy now.

“Year after year, we get a multiple return on our investment. It isn’t like getting a 10-percent return. We’ll get a 300-percent or a 500-percent return on our investment,” he says. “Some of the things that REDEX offers certainly helps the independent dealer be competitive with Camping World, such as priority service. A customer can buy an RV from me and when they go to any other REDEX dealer, they’re going to get treated as though they bought it from that dealer.”

While REDEX RV has competition in the form of Route 66, the former works by invitation only, which ensures the co-op has the best dealers in each market, he says. It also offers benefits for the dealers.

“The REDEX connection really is, in my mind, the best of all worlds,” he says. “It allows the independent dealer to do what he does best, as opposed to somebody in Chicago sending him units or parts that he doesn’t want or having him hire people he doesn’t want, yet he’s able to offer his customers the benefits of being part of a group.”

Bretz doesn’t let his staff operate in a vacuum, either. A few years ago, he asked Brandon Bretz and Shane LaLonde, service manager, to get involved in a 20 Group. The results, he says, speak for themselves.

“I think that parts and service is running smoother than it ever has in the 40 years that I’ve been involved in the dealership,” Mark Bretz says. “Most dealer-owners wish that they could not have parts and service. In a perfect world, they would say, ‘If I could wave a magic wand, those are the two departments that I’d get rid of.’ We feel quite the opposite. We really like parts and service. It hasn’t always been that way, but right now, we really like them.”