toyota price increase percentage

[radfahrer]

Our toyota dm recently dropped graphs on our general managers desk illustrating how we've "lost" major dollars over the past 5 years because our business did not increase 7% per year. the dmm states the 7% is a minimum because of thats how much toyota increases their prices on parts each year.

this figure seems high to me but i have no way to verify the 7% parts price increase.

has anyone kept track of the increases or can tell me where to look?

i cannot extract the figures from the price tape updates from the past years because we have a couple of franchises and the price tape adjustments are not entered by franchise.

[This message has been edited by radfahrer (edited 03-11-2002).]

[Chuck Hartle]

Hummmmmmmmmmmm......

Sounds like you have a rookie DM. I don't have an answer as to Toyota truly having price increases yearly of 7%, but I do have a couple of simple observations for you.

First, most manufacturers rarely increase parts across the board more than 2 to 3% at the most.

Second, even if the prices increase, your cost of inventory and gross sales will increase, but your margin of profit is still 40% basically.

If he is saying that your gross profit should have increased based on the increase in cost, then he is sorely mistaken...

Chuck Hartle'

[radfahrer]

chuck,
its not a question of gross profit, its a question of sensationalism. the rep called a meeting with the gm and the department heads and threw out various graphs showing huge losses. i'll just give you the numbers as an example.

1995 actual wholesale sales 465656.00

1996 actual 560751.00 vs "objective" of 498251.00 (465656.00 X 107%) equals plus of 32595.00.

1997 actual of 512507.00 vs objective of 533130.00 (498251 x 107%) equals loss of 20623.00

1998 423036.00 vs 570449.00 = loss of 147413.00

1999 492574 vs 610380 = loss of 117806

2000 692997 vs 653107

2001 475183 vs 698824

you get the idea. by the time he reached 2001 he was showing our gm how we have "lost"
$407093.00 in revenue.


he did this for every sales catagory, but did not approach the dept heads at anytime beforehand before dropping this "bombshell" in our laps, nor did he do any investigation what so ever into making sure his numbers were correct. case in point is these "wholesale" figures. we have our own bodyshop. prior to 1999 our bodyshop figures were recorded in our wolesale catagory. If you were to add the bodyshop figures back in for 99 and above our numbers change to

1999 640831.00
2000 857081.00
2001 847851.00

this shows that we actualy "grew" at a rate of about 9.5% per year if you compare apples to apples and far and away exceeded this "7%" growth figure. what I'm trying to find is where the 7% came from. the rep says parts prices. I'm asking for proof. and I am asking him to provide some facts on other dealers in my market and climate that have actualy achieved this 7% per year growth. I feel it was borderline malpractice the way this information was compiled and then presented in almost witch-hunt fashion.

yes two of the catagories showed downward trends, and yes they need to be addressed, HOWEVER, over the last 6 years our overall parts sales in this franchise increased by 4.5%

not as gloom and doom as the rep would make it out to be.

so i'd welcome any facts and figures from anyone as i've already invested about 30 hours responding to this analysis and will probably spend another 30 more before its all done.

At a definite loss to other areas of my business that i should be addressing!


[This message has been edited by radfahrer (edited 03-11-2002).]

[This message has been edited by radfahrer (edited 03-11-2002).]

[jerhic]

ive been with toyota for 24 years. you need to let his boss know what he (she) has done done to you. this seems to be a case of a nubee either trying to help without a clue, or just clueless. either way he (she) needs help and you have to assist by calling their boss and explaining the situation in full CALMLY.
glad he's yours.

[madmax]

i don't know about the toyota monthly financial statements, but with gm, we have a category called "inventory adjustments". you may have something similar. whenever gm has a price increase, the dollar amount shows up there on that month's statement. if you can figure out what months toyota had price increases then check the figure shown against your inventory value figure for that same month and then you can calculate the % of increase.

[cas4322prtmgr]

Madmax is correct. If you check your statement you should see small adjustments thruout the year and a large one in Jan and July. I've been with a Toyota dealership for 18 years and have seen some new rep's try some crazy things. I'm glad he/she is your rep and not mine. What Toyota usually looks for is 6%-7% increase in sales volume per year with it based off of their goal of increasing UIO and the parts and service ratio. good luck and hope for a quick change in reps.