Pricing of Maint service parts

[CPTTERRY]

I am wondering what the average parts mark up most dealerships are useing for maint type repairs, ie; LOF, transmission service, brake pads, brake rotors, belts, airl/fuel filter's ect...

We put into place a couple of years ago a parts matrix. As we all know the purpose of the matrix is to allow for competative pricing on fast movers and higher margins for reapir parts. It seems more and more the parts department is less willing to price a a competative rate due to changes in discounts and reserve allowances.

We have a variable rate for labor, seems to work well and still allows for a nice profit margin.

It's just very hard to sell batttery's for $100+ or brake rotors @ $200+ each.

Any and all comments are welcome

[robc]

I was hoping to see some replys in percentages, but since no one has jumped in yet, I thought I would.

Stores I work with will price at or near trade on some competitive items, usually on upsells though and not on repair items. For instance, a customer towed in for a broken drive belt is going to pay a few more bucks than the one we try to upsell on the LOF customer.

That being said, I always try to make an even share of competitive pricing. Service has a 70%+ gross on their cost of sales, whereas parts is in the 40% range. If we are pricing out a job for a competitive offer then we should look for equal shares of the gross. Take your brake rotor job and let's suppose this.

Brake relining w/new rotors 1.2 hrs @$70
Pads $58
Rotors (2) $360

Figure the following costs and gross:
Labor $84 sale - $24 cost = $60 gross
Parts $418 sale - $250 cost = $168 gross

We have a job that retails at $502 and costs $274. Everything in between would be open to neogiation and I would expect that the grosses would come down in a ratio that makes sense to both departments. I mean we can't ask parts to kick in a $100 discount without the same relative reduction for service - which would be $35.

Me, personally, for something this competitive would look to the aftermarket or ACDelco for better pricing.

------------------
** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[Doug]

We sell most maintenance stuff at cp30%. Oil filters, except diesel, are fixed at $5.95 each. Virtually all brake pads are fixed at $59.95. If we run into snags the parts dept works well with us to adjust pricing as needed, case-by-case. We always adjust labor, too, so that both departments participate.

Doug

[old man]

ROBC JUST READ YOUR POST
ON DISCOUNTS BETWEEN PARTS & service.
I look at it this way for gm dealers

labor $84 sale-$24 cost-$84 parts transfer=144 gross
parts $418 sale-$250 cost-minus transfer=$84
does this not make a difference?

[Art_Mopar]

We have naintenance set up at cost plus 25% on parts and a elr of 50/hr on labor. Regular repair parts are on a matrix and overall we are holding 44-45% on parts.

[jharkey]

We have to look at the parts transfer differently now. The new finacial statement from GM is not showing it has in the past. Ask your comtroller.

Jeff H.

------------------

[OLD MAN]

WHY DO WE NEED TO LOOK AT THE TRANSFER DIFFERENT NOW? ITS STILL 50% OF GROSS.ITS JUST THAT YOU CAN SEE IT CLEARER NOW.

[partsman103]

Parts are priced at warranty price and labor is performed at the warranty labor rate. If any adjustments are needed, Service usually steps up and accepts the hit since they receive 50% of the parts gross.

[CHEVYFIXEDOPSGUY]

You should consider doing a survey of your local market. It is important to understand what the competition is charging. When say competition I do not mean your local dealers. The real key is what are the mass merchandisers and independents charging for those same services. Those folks are your true competition and that is the market segment I would be focussing my attention to. After a the local survey is complete, it will be easy to determine price and gross margin potential for the parts and service departments.

[This message has been edited by CHEVYFIXEDOPSGUY (edited 04-14-2004).]

[importman4]

Ok, I am from the other side. I am a parts manager who doesn't want to "discount". Let me ask you this. Do you discount your parts alot? What is your parts discount total? Is it 10% of sales. Most parts guys will work with you. Like in my store if i sell @ 50% of gross they hit me with a 10% discount. if i sell it at 40% same 10% off. What would you sell it for. i find it that the service departments always complain about the parts side. Do you charge 3 hrs labor for breaks? My guy tells me he taking a hit at 2 hrs when it took them 20 mins to the breaks. I don't know about your store. But I get told, we have to help this guy he just spent a ton of money with us. Which means, service screwed up and didn't fix the problem now the part deparmtent has to lose money. Whats your parts total gross profit %. Should be around 40-45% any higher he ripping you off. I don't know how you guys discount. If parts does there own. But i know that since I have taken over my departments discounting they have dropped by 25%. Take your parts manager out for lunch and ask him. He might not even know his matrix is to high. Give him a list of your best customers so he can set them up so they pay MSRP. I told that to my service manager two years ago. No lists! Just complaints about pricing. The best is i haven't raised my matrix in three years. But his labor rate jumped from 75-85 in a year. But the parts guys are ripping off the customer.

Just the "parts" side of the converstation