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Date:         Wed, 30 Jan 2008 15:00:57 -0900
Reply-To:     Mark Tuovinen <mst@AK.NET>
Sender:       Vanagon Mailing List <vanagon@gerry.vanagon.com>
From:         Mark Tuovinen <mst@AK.NET>
Subject:      Re: New Car Dealers And Parts Prices
In-Reply-To:  <013201c86387$04a8b840$6501a8c0@TOSHIBALAP>
Content-type: text/plain; charset=us-ascii

Re: " Here is what I was told years ago by a guy who worked in the parts > department of a new car dealer. The dealer pays $5.00 for a part, then > marks it up to $10.00. If the parts guy then sells it to you for $15.00,> he pockets the extra $5.00. Standard industry practice? "

Not standard practice in any place I have worked/managed in the last 24+ years in the business. Some are paid hourly, some commission, some a bit of both. Does one or the other make for a more honest, scrupulous parts person, I don't think so. Yes, being on commission is supposed to provide incentive to sell more, but those that I know and work with do not try to sell more than is needed for the job. We try to treat our customers the same as we want to be treated.

Re: "Another common misconception about new car dealers: the service advisor is your friend who has your best interest > at heart. Bullsh*t!!! These guys are commissioned sales people just like the guy who sold you the car in the showroom. The more repairs they "sell" you, the more money in their pockets. Jeff"

There is truth here, many are on commission and will try to sell anything they can. This does not happen everywhere but in enough places that it gives the rest a black eye by association.

Re: "Not unusual. I've seen parts department people unable to keep astraight face when they quote some of their outrageous prices. Theycan't even believe it themselves.>"

True, but we do not make the prices, we are just the messenger. Many dealers do use matrix pricing to mark up above what the factory recommended(MSRP) price is. To be profitable you have to, the percentage allowed between dealer cost and MSRP is often not enough to cover expenses and turn a profit. The profit margin has to cover the part, shipping, storage, obsolesence, damage, utilities, space rent, salaries, the accounting dept., advertising, delivery vehicles, business owners cut, etc. Having spent a little time in the aftermarket I do know that often the profit margin on their parts is greater than that a OEM dealer gets at MSRP. This does depend on how far downstream the aftermarket vendor is from the primary supplier. I once had to tell a customer that the screw needed to hold on a seat release lever was over $9.00 at MSRP, a rare and extreme case, I then suggested that they remove the one from the other seat and match it at a hardware store. I also have custom ers come in and find that we sell OEM tune up parts for less than what they just paid at their FLAPS. There is no logic in automotive parts pricing, country of origin, exchange rates, production volume, supply, demand, number of middle men, greed, and who knows what else all have an affect on prices.

I am not defending the unscrupulous practices of parts businesses or dealership parts departments, just trying to shed some light on the other side of the subject.

Mark in AK


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