Automotive Aftermarket Industry Association (AAIA) Study

[jimmuntz]

Please offer your opinion to the following press release found at www.aftermarket.org:

March 11, 2009 -

Vehicle Repairs Cost an Average 34% More at New Car Dealerships Than Independent Repair Shops

New AAIA Study Reveals Dramatic Differences

BETHESDA, MD March 11, 2009 Vehicle repairs cost an average 34 percent more at new car dealerships than at independent repair shops, resulting in $11.7 billion in excess costs annually to consumers, according to a first-of-its-kind study just released by the Automotive Aftermarket Industry Association (AAIA).

The study reveals dramatic differences in the costs of parts and labor between domestic and import vehicle nameplates and from city to city. Consumers in Los Angeles pay as much as 46.8 percent more at dealerships than independent repair shops for repairs. The cost to consumers of specific repairs also varies widely. For example, the average cost for radiator repair for a foreign nameplate vehicle, including parts and labor, is $325.99 higher at a dealer than at an independent shop; and the cost to purchase and install front brake pads on a foreign nameplate vehicle is $138.92 more at a dealer than at an independent shop.

AAIAs Vehicle Repair Cost Analysis: Comparing New Car Dealerships vs. Independents looks at the parts and labor costs of 10 vehicle repair jobs for domestic and foreign nameplate vehicles in six cities across the country, including Boston, Newark, Atlanta, St. Louis, Los Angeles and Seattle.

In response to repeated requests by congressional leaders studying the merits of the Motor Vehicle Owners Right to Repair legislation, AAIA commissioned a study to once and for all provide a comprehensive analysis that validated the contention that it costs consumers more to repair their vehicle at new car dealerships than at independent repair shops, said Kathleen Schmatz, AAIA president and CEO.

Highlights of the study include:

Vehicle repairs for parts and labor averaged 34.3 percent more at new car dealers than at independent repair shops.

Foreign nameplate repairs performed at dealers averaged 36.8 percent more than at independent repair shops, while repairs performed on domestic nameplates averaged 31.5 percent more at dealerships than at independent repair shops.

Total 2008 cost difference for consumers having repair work performed at car dealers rather than independent repair shops for the 10 jobs equaled 11.7 billion.

Copies of the study are available free to AAIA members. The cost to non-AAIA members is $400. To obtain a copy, contact Member Services at 301-654-6664 or e-mail aaia@aftermarket.org or visit the association online commerce center.


------------------
<B>Jim Muntz</B>
Publisher DealersEdge
jim@dealersedge.com
Phone 800-321-5312
FAX 800-314-4770

[This message has been edited by jimmuntz (edited 03-17-2009).]

[texaslp]

I don't see any mention that the study evaluated customer satisfaction, was it fixed right the first time, do indys offer loaners or shuttle service etc. If cost were the only deciding factor in where to spend your money, we would enjoy a McDonalds hamburger just as much as one from a steakhouse.

[KevvyG]

Look at the source!!! What do you think they are going to say?? Gee, I bet the samples for that weren't cherry-picked!!! Gimme a break...

[This message has been edited by KevvyG (edited 03-17-2009).]

[scotstrong]

The absence of a corresponding comparison of warratnies and quality of parts makes this an apples to oranges comparison; in other words flawed beyond any use other than the political.

[Richard]

If GM/FORD/Chrysler/Toyota/Honda.et al. Would have sponsered the study, the finding would talk about how much unneccessary work was done, how inferior parts were used, and how the dealer was the cause of the overcharges, not them.

[possum]

All of us know that Dealerships have a tremendous expense burden placed on them by the Mfgrs. However customers expect a LOT more from a dealership than the aftermarket, thinking that most of the support is supplied by the mfgr., with little or no cost to the dealer.

However much of the expense is brought on us by ourselves in the pursuit of "CSI" or "Customer loyalty." The manager at an Autozone might make $40k a year, counterpeople maybe $30k. The managers and techs at Firestone and Wal-mart Auto are probably comparable. Most are open split shifts, 12-14 hours a day, even 7 days a week. Their margins are lower, and they have to do more volume, but look at the expense structure. In contrast almost everyone in a dealership sees much bigger money, from sales manager on down. $50-60k service advisors, $100k service and parts directors, managers everywhere you look, $25 hr techs, perks like award trips, demos, etc. Plus you have to add the necessity of a warranty clerk, porters, maintenance people, BDC, CRM, required tools, training, inventory investment on and on.

I'm rambling but my point is:
We're not comparing apples to apples, but that's from OUR point of view. The consumer has their own idea, and without HUGE input from the mfgrs, almost insisting on "authorized service only" we will never overcome the stigma of "dealers are a service ripoff." Even then, we will always be more expensive, and there will always be someone to sell it cheaper. Its an argument that cannot be won from our side.

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

Certified, RIeM Compliant, Thoroughly Enhanced GM Parts Manager

[TheOne]

We are comparing apples to apples. We are comparing dollars spent.

A generation ago the dealerbody essentially owned the maintenance and light repair business. Today we own about 10% of it. Customers aren't concerned about our expense structure,and the argument doesn't hold water anyway. If you are already profitable with your current expense structure intact consider it satisfied and move on.

The future of our business lies in our ability to adapt to market conditions period. We will either find aggressive ways to win back our customer and their dollars, or we will go away. Rather than attacking the study why not find a grain of truth in it, wake up, and start evolving your businesses so that they are growing instead of presiding over the erosion of a once proud industry.

[texaslp]

I could get a cheaper hair cut. No thanks
I could buy cheaper clothes/shoes. No thanks
And on and on.

More expensive isn't always better that's true, but cheaper isn't always better either.

Customer's really don't care about our costs, but they do care about service. I'm sure there are some dealerships who could come down some on their pricing to be more competitive, but there is more to the equation than just price.

[arnien]

When it comes to after market parts, I agree, some are cheap in quality. But, some are OEM parts, bought cheap from a dealer, then reboxed into some one elses boxes. I worked very hard on one of those deals, I needed Honda retun allowance, dealer was willing to sell the parts at a very low markup, the reboxing company would even send their truck to pick up the parts. A dealer down the road from me was selling Chrysler parts to the same outfit. Some labor cost at a dealership are way too high. Is it worth .2 at 80.00 to replace a wiper blade?

[sallen1]

In this country, fair trade and capitalism used to be the governing economic model. If someone charged a higher price and was successful in business, it was due to customers finding value in that additional expense, perhaps quality, fringe benefits, convenience, who knows? But this is how we differentiated ourselves from the gas station repair mechanic... similar to how Nordstroms is different from JC Penny.

I wouldn't put much into the referred study unless our new government puts some teeth into the "Motor Vehicle Owners Right to Repair".

Keep in mind that the California legislature grandstanded a "Used Car Buyers Bill of Rights" and I have yet to see anyone make claim under that legislation.

Anyway, I see more BAR investigations of independent shops. EZ Lube got into trouble and I remember Sears, Goodyear, etc. over the years.

s