Service & Parts Pricing Disagreements

[bam]

Had a situation recently where my Service Advisor sold a set of tires. We didn't have them in stock and so the parts department contacted our local Firestone store, which we do often, and they were also out of stock of this particular tire. They did, however, have a set of some ultra cheapos that might last 30k miles if you're lucky.

The parts department brought them in and put the pricing through their matrix and came up with a price of about $61 a tire. My advisor knew these were very cheap tires and called the local Firestone and asked them what the price of these tires were if he made an appointment with them today. They told him $39. My advisor told parts to send them back and order the original tires he wanted and we'd wait a couple days to install rather than going with the cheaper ones.

Question: Right or wrong move by the advisor? How should this have been handled?

[robc]

I would say a right move. If your advisor doesn't believe in the value of the tires then he was right to never put them on - regardless of how little or much profit was to be made.

I am assuming that the real problem is that parts acquired and priced the tires, without really consulting service about their relative value? Would there be a similar price/mark-up for the OE tires you wanted? Other than somehow stopping parts from ordering the tires in the first place, I am not sure what else I would change.

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

[THE FIXED GUY]

Well think about it this way whos paying for the tires and who's tail is going to be on the line when the customer is not happy with the tires.
the fixed guy

[bam]

Most tires we purchase are on the GM program and we get them for a set price. After our mark-up, they are still relatively competitive.

These other tires that were brought in were not on the GM program and so the pricing structure works differently --- basically dictated by the parts department.

[scotstrong]

Sounds like the parts dept. jumped the gun on bringing in a lesser tire without FIRST quoting to advisor and letting him/her sell them. Matrix pricing of tires is very difficult as it is far too easy to put yourself way above the competition. Customers can too easily (and do) price shop you on tires as opposed to hard parts. If they perceive you are too high on tires, you have little chance of ever selling them much of anything. If you can come in with a "competitive" price (not necessarily the cheapest), you can retain this sale AND possbile future business.

Scot Strong

[zsmith]

we sell over $20,000 worth of tires monthly at a small markup, mostly from the tire dealers inventory. It only takes a quick call or on line order, the tire store delivers, and we make about $100 on a set of 4 tires. It's easy money for the parts dept, although it does effect the gross percentage, and if the customer questions the price we explain that we aren't the cheapest price, we're just trying to make it convenient for them.

[LIFESENTENCE]

Scot is right on the money. It sounds like the communication lines broke down between the SA and parts. Also, tires (at least in this area) go for 18-25% markup. Trying to use matrix pricing would result in just about 0 tire sales here.

[DRCROMER]

Still the advisor was wrong...Service goes thru parts to get the tires..the advisor should have taken his complaint to parts and asked about the price..By going outside the loop the advisor has left a bad taste in parts dept mouth,

[BillyM]

Parts and Service MUST work together as a team...
A SA should never over step thier boundaries and go around theparts department. If this happens both the parts department and the service folks leaves themselves open to public talk around the tire shops in that area.
Keep these things private..

BillyM

[imfixed]

Let's put it in perspective!

While both departments need to work together, the service folks are on the front lines, and their integrity means everything to establishing and maintaining the customer's trust, and therefore the attachment to his/her purse strings. If the svc consultant is not comfortable with the product there is no way they can do the right job. For the same token, the parts folks need to understand that without retail customers we have no paycheck, and because 99% of those retial customers come from the parts departments single biggest customer (the service department), the parts folks should be doing anything and everything to cater to the svc depts (retail customer's) needs.
The single biggest stumbling block I run across in my travels is apathetic parts departments that have fallen ill to the "Parts Is Parts" sickness that is peppered with folks who just don't give a darn!
In today's world with competition being what it is, it's time to wake up and smell the coffee! Get you heads screwed on straight, stop making excuses, and treat the business like it's your own, not like you are just there collecting a paycheck.

Owners and managers neet to understand that you get what you pay for, so if you are not compensating appropriately ............ well, you know what I mean. No, the kid down the block from McDonalds it not who you typically want to hire!

Food for thought!