wholesale matrix parts pricing

[jbrink]

I have just recently started using a retail parts pricing matrix. I am interested in knowing if anyone out there has tryed using a wholesale parts pricing matrix? I know that you would have to exempt body shops because of the use of the factory list price.

[DRCROMER]

UNLESS YOU ARE THE ONLY DEALER THEY BUY FROM THEY WILL CATCH ON REAL QUICK UNLESS THE OTHER DEALERS IN YOUR AREA DO A WHOLESALE PRICE MATRIX TOO...

[FLYERSFAN]

I have used wholesale price matrix for mechanical shops for years and have had very few problems with it. You do get your occational price shopper, but the key for most mechanical shops is if you have the part and how quickly can you get it to them, they are usually not worried about price.

As far as setting them up you just need to set up new price codes that discount from your retail matrix price instead of suggested list price. In Reynolds that is done in 2565 and you set the discount up for each of your sources.

[RBickley]

I have tried it and it worked. Only a couple of problems with shops that had ALLDATA. We handled it by setting them up just like body shops. We were not heavy into wholesale at that store.

The Toyota store where I am at now does a lot of Body shop wholesale and it just would not work here.

Know your mix and know your competition.

[STEVEH]

I agree, the key to wholesale mechanical
shops is service. We make them a high
priority and the price is not a issue in
most cases.

[chartle]

I would certainly agree that wholesale mechanical can be matrixed as long as you are not unrealistically pricing yourself way above the competition. I did it for years also and had very few complaints. I remember a shop owner calling me and telling me my prices were higher yet two things that kept him buying from us:

* We had the part &
* He took the cost of any parts purchase and divided it by the recipicol of .60 to make 40% gross profit regardless of dealer discounts and pricing.

You know, and this might be opening a can of worms, I can't believe that in our industry we have allowed the insurance companies to totally dictate what kind of margins dealership parts operations are able to make and forcing the competition to undercut each other to the point of losing money.

I just did several analysis for mid-size stores that "dabbled" in sheet metal and after we stripped the sheet metal sales out of the pie looked at the cost of being in the sheet metal business, gross sales would drop and gross profit would drop slightly but net profit would increase. In other words, without significant volume in the sheet metal business it was a loser!

I guess the question I would pose is that why are dealership parts operations willing to selling sheet metal at next to nothing yet wouldn't do the same for wholesale mechanical shops? You couldn't! I would think it would only be natural to reduce your discounts to body shops and let someone else do something for nothing!

I have slowly seen dealership parts operations throw their hands up in the air and get completely out of the sheet metal end of the business. The arguement against this, obviously, is that there is always a wholesale whore ready to pick up the business and discount it to ridiculous levels.

Sometimes I really wonder if it is outside sources, such as body shop owners and insurance companies, that are feeding the information back to parts departments that continue to reduce levels of profit. Maybe it is time to push back, reduce discounts and watch for the result? Just a thought. Anyone out there feel the same way or are contemplating getting out of the sheet metal business altogether?

Chuck Hartle'

[kenneth]

I totaly agree with chuck why should we let other people dictate how we do business and what profit margins we make!! What could be some of the things we could do about stoping this Chuck?

[pkwalsh]

In response to Chuck's question about getting out of the sheet metal business and cutting discounts...We have discussed this in great length. We have three separate dealerships, each wholesale business is extremely different. The owners can't understand why one store does so well, and the other barely sells any sheetmetal...It is all in the competition, the store that does well has little competition. The store struggling with sheetmetal is in an area that is saturated with other dealers selling the same product...with one large dealer selling everything at cost and making money on the purchase discounts.

I have seen a local dealer completely cut their wholesale disounts to 15% off list, lose a few customers, but gain it all on the gross profit.

I think we could all go on and on about these topics, but the best solution for all dealers...and I mean all...is for us to all stand together and agree on only selling parts at a set discount across the board!!!

Then we are not dealing with undercutting our gross profits, but we maintaining our business on what really counts....How well you do your job....


.....but there will always be that one ..........

[MarkW]

Pkwalsh has the right idea, If ALL the dealers would concentrate on making their department money, there would be less of these discount wars with each other. Is it right or even fair that a body shop should make more gross on parts than the parts dept.? I have an idea, what if we could get an organization together to agree on setting a spicific discout level to body shops? How many of you would be interested in something like that?

[wct54]

MarkW,
You cannot have everyone agree on a discount structure. This would be price fixing, which is illegal.