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The strategy for up-selling performance parts in ...
The next couple of years are going to be tough fo...
Up-Selling in a Down Market
By Len Emanuelson
Do you ever wonder what’s next? First gas prices climb to more than $4.50 per gallon and everyone is dumping their gas-guzzlers. A couple of months later gas free-falls to $1.50 a gallon, but no one cares because people are being laid off in record numbers. Our major investment banks go bust, the credit system dries up, and we learn that the domestic auto industry is going bankrupt. As a small business owner, it makes you want to climb into a hole and hibernate for the next six months.
The next couple of years are going to be tough for small business, but there is a silver lining for engine rebuilders fewer people can afford to buy new cars. Instead of trading in, they’re going to have to put a few bucks into their existing rides. And that’s not a negative thing, because many car owners have probably thought about improving or modifying what they already have, but just lacked the motivation. Real car guys are always playing the what-if game … what-if I installed a stroker motor, or what-if I installed a supercharger, or what-if…? And today’s $1.50 gas is not going to hold them back.
Unfortunately, the general uncertainty surrounding the economy will temper some of these “power dreams,” but up-selling your customers with some affordable incremental modifications can be a good way to keep your business moving forward in a stagnant economy.
The strategy for up-selling performance parts in a down market is pretty straightforward we simply want to substitute some of the standard rebuild components with new performance parts. When you think about it, you are essentially discounting the performance parts by subtracting the cost of the standard components. If the standard cam and lifter package you use costs you $60.00, and a performance aftermarket cam and lifter setup that retails for $175.00 costs you $130.00, the effective price increase to the customer is $115.00. The added profit to your bottom line is $45.00. It’s a huge win-win situation for you and the customer. He gets an added 40-70hp for just an additional $115, and you add more margin to your product for very little effort.
You can apply the same upgrade strategy to the timing chain set and a high volume oil pump too. For customers or markets that can withstand higher prices you can also consider forged pistons versus cast and a high-end ring set as opposed to the commodity ring sets. Each time, the customer pays just the difference in price and you make more money for the same or less work.
In my opinion, the most difficult and labor-intensive part of any engine rebuild is doing the cylinder heads. Think about it you invest time and effort in cleaning and inspecting for cracks, only to find that you have an unusable core and you have to start the process all over again maybe even waste more time locating new cores. If the cylinder head castings pass your inspection process, you then may have to replace valves, valveguides, valveseats, springs and add new seals. The problem is you are always dealing with a bunch of unknowns, and unless you budget every head rebuild for the worst-case scenario you never know what your profit structure will be.
Headwork is time consuming, tedious and requires a skilled technician and good machinery to get it right. Depending on how well you manage the cylinder head work, it can be a profit center or a sinkhole for your business (especially if you get a comeback).
There is a better way aftermarket replacement cylinder heads have become extremely cost effective and available for a wide array of engines. They offer so much upside potential in my opinion that they can’t be ignored, especially if you run a smaller specialty rebuild shop. First, and most important from a performance perspective, these heads offer much improved intake and exhaust flow over most of the O.E. heads. Improved airflow is horsepower it’s that simple. And with the low cost replacement heads we are talking about as an upgrade over rebuilt stuff, it is almost impossible to select a cylinder head that is too big, or offers too much flow, which can be the case with dedicated racing heads.
Another huge upside for the rebuilder is time and investment. Instead of dealing with the intense labor, machine requirements, and shop floor space that cylinder heads require, you just walk over to the parts shelf, pull off a set of new heads, torque them in place and forget about them. What the customer gets are new heads that in most cases offer a huge performance advantage and have more longevity and value than a head refurbished with mostly used parts. The rebuilder gets real peace of mind that the engine will not be coming back for a stuck valve or excessive oil consumption, plus he can build engines at a much faster clip with the same number of people.
Look at what you get and pass on to your customer with new aftermarket cylinder heads: brand-new iron castings (and in many cases aluminum castings), the latest high-flow port designs, hardened exhaust seats, new valves, springs, retainers, locks and seals and they come fully assembled with a high performance multi-angle valve job and freshly machined mating surfaces.
Before you start thinking that you’re going to have to triple what you are already charging for your engines, let’s look at what we are talking about for prices. You can look at manufacturer’s price sheets all day, but to really determine what the market is for anything in the performance aftermarket I go online and check prices. It will give you a good indication of what you can charge your customer. So we look up a few potential heads for the venerable Gen 1 small-block Chevy. Let’s select an RHS Pro Action head which is a true high performance aluminum cylinder head that’s capable of 500+hp for $600 (each) ready-to-install. You should be able to purchase these wholesale for 15 percent less than that. Too much money for the guys you sell to? How about a World
Products fully assembled S/R Torquer for $430 (each)? Again, an excellent head with much more power potential than a rebuilt stocker. That’s real value in my book, and your marketing potential has just soared over the moon.
I would love to have a customer standing across the counter from me and have the ability to offer him a 350 small-block Chevy with a hot cam and high performance aluminum aftermarket cylinder heads for two-thirds the price of a GM Targetmaster. Do you think that you could close that sale?
While we are using the Gen 1 small-block Chevy as an example, there are several cylinder head manufacturers offering head, cam and even intake manifold kits for incredible prices. It removes matching the cam to the heads and manifold, if you’re not in your comfort zone doing this. Patriot Performance is just one such aftermarket company that does this. In fact, it includes its Freedom Series high-flow heads, Edelbrock Air-Gap intake manifold, a Howards cam and lifters, hardened pushrods, Fel-Pro gaskets, ARP bolts, new roller timing chain set and they even throw in a freaking T-shirt for $1,375 (retail). They sell this same combination in a 9:1 350 crate motor and guarantee 350hp and 370 ft. lbs. of torque. Simply put, it’s a high-performance top-end in a box.
Sure, there’s plenty of budget cylinder heads for Chevys, but what about everything else? With a little searching on the Internet, you can find just about anything you need. My old buddy Steve Dulcich from Engine Masters magazine just built a budget 318 Chrysler A motor with a set of affordable EngineQuest cylinder heads that made over 350hp and with some minor porting climbed to 425hp.
It seems that there are as many or more options for Fords as there are Chevys these days. When you get into the Ford 4.6L Modular motors the prices for new heads climb, but if you look, you can still find deals that make more sense than rebuilding. A good example is the Ford Racing PI (power improvement) head that is a brand new 2V head with camshaft and sells for $390 retail (each). If you can purchase these wholesale at a 15-20 percent discount, there’s some good money to be made here. There are many manufacturers like Edelbrock, SLP and others that offer head and camshaft packages. Just make sure that the total cost of these packages fits within your final pricing structure.
A couple of things to keep in mind when selecting and using aftermarket heads is compression ratio. Shoot for 9.5:1 for cast iron heads and 10.25:1 for aluminum heads. Most head manufacturers offer a selection of different combustion chamber volumes, and you reach your goals with the right piston and head gasket combination too, if there are no head options.
The performance up-sell shouldn’t end with the cam and heads. Although they are the biggest determining factor of how much power the engine will produce, removing the air restriction into the engine is very important too. In good times you try to sell a complete new intake system. In hard times you try to sell a larger throttle body and save the manifold upgrades for later. Several companies sell larger throttle bodies, but prices are all over the place. Some manufacturers like Professional Products offer a full line of throttle bodies that are very affordable and are good quality. The better price you pay, the more money you can put in your pocket at the sale.
Don’t forget, a big part of selling performance is marketing. You need to attract the type of people interested in better performance into your shop. It doesn’t take a lot of money or effort to do this. A little ad in the local freebie auto seller offering a weekly or monthly special is all that it usually takes. Some banners or point of purchase materials in your showroom are important too. And in my opinion, having a sample of a clean, nice-looking fully assembled, aluminum cylinder head sitting on the counter is also effective. Many customers will have no idea what these parts look like, or how nice they really are. You or your salesman can flip the head around and point out all of the features he’s getting for not much money.
Selling performance is not hard, even it difficult economic times. You always have to make the case for value in the upgrades. Convince your customer that now is the right time to make the desired modifications. It’s poor economics to go back and change out these parts at a later date.
Remember, there’s always a higher profit margin in performance. Happy selling.