ROI Analysis of Power Liftgate Motor Upgrades

Why is ROI Analysis Important for Power Liftgate Motor Upgrades?

In the end, every business or distributor considering an upgrade for power liftgate motors wants to find out first: will the ROI be positive? This isn’t about hopping a trend; it’s about making a decision that is sensible for your customers and your profitability. Car owners today expect more than a plain tailgate. They want a tailgate that offers the most convenience, like one that opens with the push of a button. If you sell or install automotive aftermarket accessories, the ability to offer upgraded Power Liftgate features will help you stand out from competitors offering outdated, inferior products.

Not every upgrade offers the same value. Consider each investment carefully—will better motors lead to repeat customers, more sales, or lessen your stress in the future? Take, for example, a provider who worked for 17 years in the automotive industry, starting with CD and DVD mechanisms, and moved on to electric tailgates. They might have stronger motors, meaning you’ll have fewer returns or repairs. That is part of the return on investment (ROI) too—not just the initial sale value. Also, servicing over 200 models, like the 2024 Toyota Prado and the 2022 Honda Odyssey, as of 2024, is a lot for a provider. If you can pick best-selling cars, you will be enlarging your client pool, which makes the investment more beneficial.  

The risk of not performing an ROI analysis is the cost of not upgrading. If you stay with cheap low-quality motors, you will likely receive more customer complaints, warranty returns, and lost business at a certain point. A quick ROI evaluation provides a basis from which to estimate risk as well as the non-recoverable upfront cost. This way, you eliminate the guesswork and make a confident decision.

Analyzing the Total Costs Involved with Upgrading Power Liftgate Motors

The first cost involved with upgrading power liftgate motors is the price of the motor itself. However, costs are not as simple as just looking at one price; one needs to evaluate the quality and how well it matches the system. Additionally, manufactures with their own factories tend to have more consistent quality and offer better pricing when it comes to bulk purchases. For example, you may pay more for a motor that is tailored to fit a 2015-2022 Toyota Land Cruiser LC 300 over a generic one, but the tailored motor will fit and last longer which will save you money in the long run.

Another cost involved is the installation cost.  Some motors are more straightforward to install than others; if a motor comes with detailed instructions, or if it is designed to fit existing tailgate setups, it will take your team less time to install. From a cost standpoint, this is beneficial regardless of whether you are doing it in house or outsourced. Furthermore, if the provider offers install support to your team, you won’t have to pay extra for external training, this is an upfront cost savings.

After-sales costs should not be overlooked. If a liftgate motor costs a particular price, it should command a warranty of that length, probably covering repairs or replacements for up to three years. If a motor does not have a warranty or has a warranty for a short time, that will imply you will have to spend more on repairs yourself, cutting into profit. Lowering the risk of having cash tied up in non-moving stock is valuable, so consider it when stock is accepted for return as a business policy. All these overlooked costs have to be accounted for in your ROI calculations.

Key Benefits That Leads To ROI For Power Liftgate Motor Upgrades

Increased customer satisfaction is perhaps the biggest contributor to ROI, and it ultimately results in more sales. Just imagine the experience a customer has when buying a car equipped with a new power liftgate motor. Cars with upgraded power liftgate motors are more reliable and smooth in functioning. Customers do not have to experience frustration with motors that jam or malfunction after a short use. Satisfied customers increase your sales by passing referrals to their friends or returning for additional enhancements. A family purchasing a 2022 Honda Odyssey and praising the new power liftgate motor for its ease in loading strollers may be a fantastic example of this. The family will likely spread the word to other parents, increasing your sales.

Another important factor for return on investment is long-term cost reduction. A well-built power liftgate motor has low breakdown frequency, resulting in fewer warranty claims and repair jobs. For example, with a monthly sale rate of 100 motors, a cheap motor with a 10% failure rate will end up costing you repairs on 10 motors in a year. A more expensive motor with a 2% failure rate means you only have to deal with 2 problem repairs. This saves you time and repair costs, as well as avoiding customer dissatisfaction. In addition, automotive component providers with decades of experience like those who started with CD/DVDs and have been in the business longer know how to build durable motors, so you are investing in durability on the first place.

A competitive advantage boosts your ability to set prices. Most of your competitors are selling cheap, low-quality motors. Even so, you can increase the price of your power liftgate motors because you offer more. People appreciate useful, dependable products, and they will gladly pay a premium for the ease of the convenience. They’re even more likely to pay a premium if you can demonstrate how a motor can simplify their daily routine. What's even better is that you can sell motors for over 200 models of vehicles. This range can be marketed to people with old Toyotas to new Volvos, allowing a wider scope for your sales opportunities. This is certain to widen your target market.

Return on Investment from Power Liftgate Motor Upgrades

Consider the case of a distributor upgrading from generic to improved quality motors for the bestselling SUV, the 2020-2022 Toyota RAV4. Upgrading to quality liftgate motors is $30 more per motor. Since this distributor purchases 500 motors, this amounts to $15,000 in additional costs. This section details anticipated returns. 

Let’s assume this distributor sells 100 RAV4 liftgate motors per month. It is plausible to state upgraded quality motors will increase sales to 150 per month. At $200 selling price per motor, the additional revenue generates $10,000 monthly earnings. This is a direct additional 66% profit margin to the improved priced motors. In this example, warranty claims expected monthly reduced from 8 to 1. This results in an average savings of $700 per month on warranty repairs. Customer satisfaction also directly increased additional returning customers 5 per month.  This theoretically increases monthly turnover an additional $1,000.

Let’s calculate your extra monthly profit. It’s $10,000, plus $1,000, and then subtract $700. That brings you to $10,300. That means you will earn back your upfront investment of $15,000 in under 2 months. After those 2 months, you will be making more profit every month. And this does not even include the many long-term benefits, such as loyal customers returning for motors for other cars, or customers choosing your business over others due to trust in your products.

Consider another case of a local car accessory shop and the new motors compatible with the 2024 Prado, a new model that is highly sought after. They spent $5,000 on the initial stock and training, and within 3 months sold all the motors, as Prado owners were looking for reliable upgrades. They made a $3,000 profit on those sales, for a total extra profit of $8,000 by the end of 6 months. The shop also observed that customers who purchased the Prado motor were more likely to buy other accessories like floor mats or seat covers, increasing overall sales by 15%. This demonstrates that the ROI is not solely about the motor itself.