The PSA Group-owned Peugeot Citroen Retail Group in the UK completed trials that started in 2015 aimed at removing the parts operations at its dealerships. The result was a reduction in dealer staff and costs such as operating parts vans.
It has built a network of 30 regional parts hubs that are selected existing dealers. They now supply franchised dealerships and independents in their area.
This system replaces the retail group’s process of delivering parts every day to each of its 200 individual dealerships – a process that is used by most car manufacturers.
Peugeot Citroen Retail Group managing director, David Peel, said the centralised system “was never the most cost-effective distribution platform”.
“On occasions where a part was unexpectedly needed to finish a car within the day some dealers would resort to using local motor factors,” he said.
“Now the hubs are delivering parts to dealers up to three times daily.
“The average dealer has less than (the equivalent of) $20,000 of parts in stock, they have no obsolescence, their parts sales will increase and they can provide better customer satisfaction, while the hubs provide that scale so the dealers can reduce their costs.”
He said that under the new system, Peugeot no longer sets dealers a parts target but the regional hubs will have a target and incentive scheme for the dealers in their region.
Automotive Management Online reported that during the trial at Peugeot Citroen Retail Group, the program connected the parts hubs to dealerships’ DMS, so they could pre-pick service parts and receive electronic vehicle health check demands direct.
Parts were bagged and tagged specifically to each job booking before being dropped at the dealership for the technician to use.
But Mr Peel said this trial process may not be as simple for the franchisees operating hubs because they would be serving dealers and independents with a variety of dealer management systems.
The PSA program was announced in 2015 in the UK as a way of increasing the frequency of parts deliveries.
It had a single warehouse in Coventry that delivered to more than 500 Peugeot and Citroen outlets across the UK.
PSA then proposed to appoint 30 dealers to act as regional hubs and to deliver parts to other dealers three times a day.
The UK program is part of a Europe-wide strategy aimed to boost parts business in the face of increasing competition from independent distributors including Euro Car Parts, owned by US giant LKQ.
LKQ is the biggest supplier of aftermarket and recycled collision replacement parts and reconditioned parts in the US and Canada. It is now moving Euro Car Parts into smash repair components to compete with manufacturer’s genuine parts.
LKQ had an alliance with major Australian insurer Suncorp. That ended with Suncorp buying LKQ’s share of the alliance. It is now fully-owned by Suncorp and trades as ACM Parts, though Suncorp has access to LKQ’s product sourcing and technology systems.
By Neil Dowling