Wholesale Discounts

[partz61]

Interested in finding out what discounts everyone is offering to Body Shops.Also at what return percent do you consider a Body Shop not profitable and would rather not do business with them.
We are a Mopar Mid Atlantic Dealer.
We offer between 25% and 31% off of List depending on purchase levels.I'm being told we need to increase our discount program to be more aggressive and competitive.
We currently are holding on average 15% wholesale gross profit.Appreiciate any input.

[scotstrong]

Who is telling you that you need to increase your discount?

Scot Strong

[partz61]

A "consultant" is telling our GM this.The GM wants us to increase our wholesale business.Our 3 month avg is in the $150k per month range.

[johnny o]

Rarely is there new "wholesale" business it is usually robbing someone elses established customer ...

The same consultant should then say to sales and General Manager ..." you should lower your car prices and you would sell more cars". I would think they would be shown the door.

[DRCROMER]

In our area the big boys sell wholesale at cost plus 10%...hard to compete against that.

[kcatdeejay]

At one time the alleged break-even point on wholesale was 17% GP. Don't know if that still holds true, but I do know that the 'ladies of the street' market has really gone to new depths. I once went on record many years ago and said that eventually there will be some that will pay people to take their parts. How far are we from that now ? It's a good thing that the majority of dealers are ABSOLUTELY clueless when it comes to wholesale parts because if they had a brain, they wouldn't be out in this market trading dollars. What an exercise in futility. I knew of one 'big wholesale operation' with four delivery trucks doing $50k per month in gross SALES-what a joke!

[kcatdeejay]

At one time the alleged break-even point on wholesale was 17% GP. Don't know if that still holds true, but I do know that the 'ladies of the street' market has really gone to new depths. I once went on record many years ago and said that eventually there will be some that will pay people to take their parts. How far are we from that now ? It's a good thing that the majority of dealers are ABSOLUTELY clueless when it comes to wholesale parts because if they had a brain, they wouldn't be out in this market trading dollars. What an exercise in futility. I knew of one 'big wholesale operation' with four delivery trucks doing $50k per month in gross SALES-what a joke!

[scotstrong]

Did this consultant also advise your GM that along with an increase in wholesale business comes an increase in bad debts and an increase in obsolescence? These are cold, hard facts that go with the territory. As johnny o stated, you are usually just taking someone else's customers. These would be the same dealers that you probably upon occasion need to purchase a part from for your own shop or for one of your customers; how is stealing their customers going to affect this relationship? Also, the customers who are willing to switch are usually the ones you don't really want anyway -- high return rate, credit deadbeats, n.s.f. checks, never know what they really want, and on and on. If you are in a market that is already saturated with wholesaling dealers of your carline, what are you going to offer that the others do not to create an incentive for any particular customer to make a change? If it is merely a larger discount, I would strongly suggest that you determine if you are already losing money on wholesale (based on your own dept's expense structure; not some arbitrary industry 'standard'). If you would like to e-mail me, I can provide you with a formula to make this calculation. Larger discounts are only going to make this number go backwards; so you need to know where you are currently first. You can then show this info to the GM and ask "Is this really a good idea?"

Scot Strong

[partz61]

Thank you scotstrong.
That is exactly what has happened to my Dept..I am in a market that is a very competitive wholesale market.I have 5 same make dealers within a 20 mile radius.I'm almost certain that at least 2 of them have double the inventory that I have.We have no more room here.This facility was never designed for a large wholesale operation.And I dont think there is enough profit in wholesale parts to justify spending money for off site storage. With Mopar cutting wholesale allowance,raising discount levels (and we are not talking small increases),and providing sub standard service from our PDC,I am finding it very hard to take on more.We are selling more parts but the bottom line remains the same.My obsoloecense is a struggle to keep ahead of.I would be interested in using your formula.What is your email?Thanks again for your input.

[scotstrong]

partz61:

You can e-mail me at renosablast@sbcglobal.net

Scot Strong