PARTS V SERVICE RIDDLE

[partspuma]

Curious how other dealers mark up AFM parts. We use a matrix system here. I was told yesterday that our mark up is too high. Normal range is $10.00 to $99.99 is 2.00 all others fall in line by .25% tiered +/- up to $250.00. Also are you quoting GM, AFM and salvage parts to your service dept? On every inspection every time?
If so is the service dept giving you and your people the extra time to take the extra steps? Does your service dept give the option of the customer bringing in their own parts?
My other question is Wholesale customers. Do you give them a discount even if they are your direct competition? It was put to me yesterday that I am sliting the service depts throat by offering a discount to my wholesalers. I should be charging them list and letting them mark up from there so when people price shop they look like they are ripping them off.
Thoughts? Ideas? Help??

[scott2112]

Seems like you all are making this too hard. My owner has a goal that my department reaches 40% gross profit every month. In order to do that, I use a price matrix for cars in service. Internal vehicles are done at cost + 100%. I only offer AFM for last resort and they are priced on a matrix. I don't do a ton of wholesale....two shops are at cost + 40% and the rest are at list -10%. Their volume determines their discount.

The way I figure it (at least here)

- techs always get more than book time on CP tickets. no one ever cries foul
- service always gets their labour rate and book time.

Since the above facts are correct, I am entitled to my MSRP or more. The GM wants a goal and its my job to reach it. I will not be the only department to cut price to get a job done. The tech has to play, the service department has to play, and then I will. I will not be the only department having their pay affected.


and Bob's your Uncle

[partsman103]

Curious how other dealers mark up AFM parts. We use a matrix system here. I was told yesterday that our mark up is too high. Normal range is $10.00 to $99.99 is 2.00 all others fall in line by .25% tiered +/- up to $250.00. Also are you quoting GM, AFM and salvage parts to your service dept? On every inspection every time?

AM mechanical parts are priced at cost x 2
OEM mechanical parts are matrixed with the least expensive part set at cost x 1.87

At the end of each month, Service gets 1/2 of gross transfered to their dept from repair orders. If anything Service should be happy that you're on a matrix because yhey're getting half of the parts profit from the repair orders.

We are a GM dealer and mechanical parts purchased from non-GM dealers are priced the same way as AM parts.

Does your service dept give the option of the customer bringing in their own parts?

Do not give the option but it has happened a couple of times where the customer has brought in their own part. Service will note on the RO that customer supplied own parts and there is no warranty on our Labor.

My other question is Wholesale customers. Do you give them a discount even if they are your direct competition? It was put to me yesterday that I am sliting the service depts throat by offering a discount to my wholesalers. I should be charging them list and letting them mark up from there so when people price shop they look like they are ripping them off.

Chain Stores (Advanced, Auto Zone, O'Reilly, etc..) are sold at list price only because the price they sell to walk-ins is the same price they sell to us. If a Part Store sells to us at "Jobber" price, then we sell to them at wholesale.

[Zep33]

Too many times service writers want prices on aftermarket because they're too weak to sell the quality GM parts. Those parts get marked up the exact same amount we would have made by selling the factory part that we had in stock all along. So if we were going to make $150 on the GM part, we're also going to make $150 on the aftermarket part. Sometimes that makes the aftermarket part almost the same or close enough to the factory part. They just don't get the investment we've already made to have the parts on the shelf ready for sale. I'm not willing to make less money for more effort and expense while our museum quality factory parts gather dust.

As far as wholesale accounts, if you mean repair shops, you aren't going to hurt them by not selling to them because if you don't, someone else will. You're only shooting yourself in the foot by not giving a discount.

Sounds like your service dept is extremely short sighted

[X476]

Remind service that by selling parts at wholesale you get more demands on parts that you could possibly stock and have them when they need it.
Aftermarket in my opinion should be at minimum 10% over what they show for a list price.
There is nothing wrong with using a matrix as long as it is not outrageous (your doesn't sound as if it is),
I would ask service if they follow the labor manuals EVERY time or do they add a tenth or two depending on the job.
Lastly sit down with the service manager and show him how the matrix works and why it's needed that way he/she can go to the writers and explain to them why it is needed.

[partsguy99]

Too many times service writers want prices on aftermarket because they're too weak to sell the quality GM parts.

Yes, you're right. BUT, those SAME service advisors have NO PROBLEM telling our customers
that it will cost $800.00 dollars to install that part.

[partspuma]

I'm so very tired of defending my dept for the price of our parts. So and so can get it on Ebay, Online rip-off no warranty unless you pay all the shipping both ways for all our customers on Wednesday, joe schmo at parts are us or any of the others. The GM wants us to give the customer more than an OEM option because service sales are walking out the door to the guy down the street. Last I checked we were a GM store selling GM vehicles and parts. I sell to the guy down the street that got the job we over priced. I actually sold the part to him for the job. I sold my GM part anyway! I don't want to lose customers either but I didn't over price the job. The parts total on the job was $50.00, labor was $396.00. It is just one small incident that was brought to my attention and in hindsight they said it was a poor example... ya think?
Thanks for all the feedback. It is sometimes nice to know I'm not alone and all ideas/opinions are helpful in the constant struggle to work together with other departments.
Who's ready for an ice cold brew?

[CMayne]

"Who's ready for an ice cold brew?"
Make it a shot of JD and your on. I would get in on this topic otherwise but I will probably P O as many parts people a service people. I just wish our service dept realized that a 10 year old car is prime for upsell and start friggen doing it!!!!!!!!!!!!!!!!

[Stevenspeaking]

I always disliked the service parts conflict. The managers need to work this out. If the service writers have an issue ask them to bring it to their manager for him/her to present to parts.

Start a file of the "competitors" repair orders. Every time there is an over the counter warranty part ask for a copy of the repair order. you will see in most cases they use a matrix as well that prices the part higher than your matrix. Write down what the part retails for on that day. Then when this subject rears its ugly head you have proof that they sell parts at the same or higher prices than the dealer.

If you need the ammo now try calling your shops and just ask for some copies of repair orders. You do them favors now its your turn to ask for one.

The key is to have the CYA ready so there is never a hesitation in your response to the question.

I also wonder how much does a tech get paid and what is the labor rate? Maybe you should just copy their matrix.

Steven

[Zep33]

I'm wondering if any parts manager ever went to the service department and told them their labor rate is too high because Joe's garage down the street only charges $75 an hour.