Quantcast
Jump to content


Recommended Posts

Posted

Guys, we are having a tough time figuring out mark-up on dealer sourced parts. Currently we are selling parts at DEALER LIST and getting parts at DEALER COST, which is roughly 5-20% below list.

This currently isn't cutting it for us.

 

We have considered using the Dealer Parts Matrix, which I have copied below. The problem is that using this matrix will put most of the jobs we do WAAAAAY above the cost of the dealership, which is not an option. Customers get a brand new loaner car at the dealer. They get free food there. They get factory-trained technicians there. etc. We have a great facility and a great warranty. However, we cannot compete if we are way above dealer costs...

 

So, with that said, what strategies are you using on dealer-sourced parts?

 

 

DEALER PARTS MATRIX

$Part cost Gross Margin Divide By

0.01-1.00 70.0% 0.30

1.01-5.00 65.0% 0.35

5.01-25.00 60.0% 0.40

25.01-75.00 55.0% 0.45

75.01-500.00 42.0% 0.58

500.01-750.00 32.0% 0.68

750.01 and up 28.0% 0.72

  • Like 1


Posted

Don't forget that when you purchase parts from the dealer and resell them to your customers, you are adding your warranty to that part, plus your time to source the parts, and your tech's time to inspect said parts once they arrive. All that has to be integrated into your pricing to be profitable.

 

That being said, I believe that matrix will yield close to 45% GPM average on your dealer sourced parts, which I agree is probably too high to compete.

Look at tweaking the matrix, especially in the $25-75 and $75-500 ranges, or even create your own cost ranges. (I personally think $75-500 is too wide of a range)

Don't forget that it's just a guideline, not anything set in stone.

Also don't forget that you should be constantly looking at and tweaking your matrices to make sure you're hitting your GPM targets, it's not a "set it and forget it" solution!

 

You say you get 5-20% GPM on your parts, say 15% average. Find out what would it take to be profitable and still competitive. 25%? 30%? Just make small changes until you're hitting your desired GPM.

Also, if you buy a lot of parts from the dealer, consider asking to get your account on a better pricing level. Even a couple percent difference can be a big help.

  • Like 1
Posted

There are a few ideas that I think could help a lot.

 

1. Pick a few parts dealership you may typically use. Price the parts from the parts department, then try to get an estimate from the same dealership for a repair using those parts. You will probably see the service department has higher parts prices, because they also can not do repairs without proper margins.

 

2. Bstewart is right, The $75 to $500 spread is too wide, craft it into a few categories.

 

3. Consider using OEM alternatives. There are suppliers that specialize in Motorcraft and Delco for example. This will allow you to use something closer to dealer list, and get a much better cost factor.

 

4. Decide what you must make, and explain that you provide a service, which includes parts, labor, sourcing, estimating, customer service and not to mention providing a warranty. Take the focus off parts pricing. You don't go to a Restaurant and focus on the fact that your steak would be $ 4.25 at the supermarket, and it is $ 28.50 on the menu, for obvious reasons. We are in the service business, and you must steer the conversation to this fact.

  • Like 1
Posted

I try to avoid dealer parts If i can get as good or better parts elsewhere. What mark up i don't decide to get in parts i must collect in labor and fees. I will compete on Caring Service and Referrals. I customer has discount card of mine they get $ off as well.

Posted

I was told through shop management education that I should be charging using the same matrix with all my other parts. I have never been able to do so HOWEVER I do charge over list in a very unscientific/mathematical method. Since I've started doing this (about 3 months) I have yet to hear any complaints. Normally my customers do not price match and shop around. Do your customers shop around? I am not used to dealing with those customers so forgive my comments if that is your situation.

 

Its in my opinion that your customer care, presentation, workmanship and warranty is a far greater selling point than a loaner car and free food. At the dealership you hardly ever if ever speak to your technician and the place has the feeling of being "ripped off" which consumers understand. Also your warranty I'm sure blows dealership warranty out of the water. When consumers choose your business they get YOUR support. Not some fast talking SA that might be gone the next day. These things should be a strong enough position to charge over list. How much over list is up to you. A Dealer parts matrix is a good start.

  • 1 month later...
Posted

This is the matrix we are using currently for dealership sourced parts

Your cost Multiplied by:

.01-5.00 3.25

5.01-50.00 2.25

50.01-100.00 1.82

100.01-175.00 1.67

175.01 and up 1.54

 

Sometimes we have to adjust our price up or down, but for the lower cost items we try to mark up even more to compensate for the lower profit margins from the dealership parts.

  • 2 weeks later...
Posted

Not sure what the big deal is with dealer sourced parts. I have all ways heard this from several business owners. They are parts and that is all they are, so we run them through our normal parts matrix. We provide the same customer service, warranty, etc. as other parts so why not mark them up the same?

Why does you customer have to know where you are getting the parts? I think you create problems telling them where they come from. It opens yourself up to price shoppers. I have done my shopping at the service departments at local dealers. Their parts are just as expensive when it goes through the service department.

Posted
  On 1/13/2015 at 8:29 PM, Oakville Auto said:

I have done my shopping at the service departments at local dealers. Their parts are just as expensive when it goes through the service department.

 

Oakville, we actually did the same exercise a few weeks ago. We called the dealer parts department and got a price. We then called the service department to get a quote using that part. Turned out that most dealers in our area are using the dealer list pricing when pricing the part for a job.

 

Therefore, if we matrixed the dealer parts, we would not be anywhere close to competitive, which is unfortunate.

 

Anyone else have insight on this?

Posted

Here's something to consider. In my humble opinion, using a blanket price matrix just doesn't
make sense any way you look at it. Because there's different distributor pricing structures,
in every region of the country. In addition to that, it's only a matter of time before one of
your customers spills the beans that your pricing is off.

Think about it... if you can call up your competition and get their pricing, so can your customers.
And they are.

So, here's another way to look at parts pricing: It's common knowledge that if you're buying
straight from the dealer, you're not necessarily going to get the best price...
unless that dealer is big into the wholesale side of it, which most aren't.

So, if you're buying a lot of dealer-sourced parts, you want to look for a wholesale distributor
for that brand. You want to find somebody out there who is hungry for your business. And
there's plenty of companies that are hungry for your business.

Here's how you do it. You call up the parts dept. And you talk to the parts manager. And
find out if they can help you out.

You say to them, "We're looking for a supplier. Can you help us?" See what they have to say.
You need to be guiding the conversation.

If they get off track and start talking about how long they've been in business and how they're
a family-owned business, tell them that's great and it still boils down to:
"How can you save me time?" Or "How can you make me money?"

If he/she can't give you an answer, then next.

The first time I learned this was when a Chevy dealer across town - 20 minutes away -
approached the shop I was managing. Up until that point, we were buying dealer parts
from the Chevy dealer closer to us. But we were getting creamed on price.

After negotiating a deal with the one that had approached us, we ended up being able
to buy parts that were priced 10-20% better than the closer dealer PLUS we got shotgun delivery service.

So, not only did we get better pricing, we got better delivery. Plus they had a better inventory
because they were in the wholesale game. I found out later, they made daily deliveries to shops
over an hour away.

So, the point is: those opportunities are out there. You may have to do some research and
make some phone calls. But it's going to affect your bottom-line and pay big dividends, so it's worth it.

Even if you're in the middle of a cornfield. Tires, parts, TBA distributors. Those opportunities are out there.

The Mighty brake program is another example. We used to make 75% GP on brake jobs because of
how we were BUYING: http://www.mightyautoparts.com/brake-pads-shoes

So, if you take the time to do some research and interview these companies - in a couple months time,
you'll be set up. And you'll be doing business with people that WANT your business.

In addition to that...
Some parts and tire companies are independently owned and even have a consignment program.
For example, if you want to see if you can sell some tires, get on a consignment program. It doesn't
cost you any money.

Bottom-line...
You make money when you buy - not when you sell. And as you said, if you're pricing yourself
out of the market, it's only a matter of time, when a customer gets wise to it and the next thing you know -

the whole town will know you're not competitive.

There are very few shoppers these days that are not using the internet and other means to make sure
they are paying a fair price for everything they buy, including auto repair. And they will not hesitate to
post reviews about their experience. So, trying to make an extra few bucks on one ticket could cost you

tens of thousands of dollars or more... down the road.

One more point...
If you're not selling a lot of dealer parts or in the rare situation where you can't get hooked up with a
warehouse distributor, just set your pricing at MSRP and forget it. You're making whatever it is just
to open up a box... whether it's 5-20%. Averaged out, you should still be able to hit a fair GP percentage average.

The real money is in the labor and the service you're providing and the long-term relationship with
your customers that view you as the trusted shop.

PS When it comes to buying parts, tires, supplies, etc., there are group buy opportunities and
plenty of other options we can talk about, if you want.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Available Subscriptions

  • Have you checked out Joe's Latest Blog?

         0 comments
      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
  • Similar Topics

    • By Changing The Industry
      Why Auto Shops Are DITCHING Aftermarket Parts in 2025?
    • By carmcapriotto
      Sometimes life just doesn’t slow down, does it? Between running a business, managing a team, and balancing everything else, it’s easy to feel like you’re drowning in tasks. If that sounds familiar, you’re not alone.
      Hi, I’m Kim Walker, and today I’m sharing my personal journey through a season of overwhelm—and how I’m finding my way back to productivity and peace. This episode isn’t just about getting things done—it’s about giving yourself the grace to start where you are and take small, meaningful steps forward.
      So, take a deep breath, grab a notebook, and let’s get organized—because even in the chaos, we’ve got this
      Thank you to our friends at RepairPal for this episode. RepairPal will introduce your shop to new customers through repairpal.com, the largest site for auto repair. Learn more at RepairPal.com/shops.
      Are you ready to convert clients to members? App fueled specializes in creating custom apps tailored specifically for auto repair businesses. Build client loyalty. Get started today with your own customer loyalty app. Visit Appfueled.com 
      Lagniappe (Books, Links, Other Podcasts, etc)
      Stephen Covey's Time Managment Matrix 
      Remarkable Tablet 
      Time Blocking
      Show Notes with Timestamps
      
      How To Get In Touch
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - podcast@shopmarketingpros.com 
      Aftermarket Radio Network
      Remarkable Results Radio Podcast with Carm Capriotto: Advancing the Aftermarket by Facilitating Wisdom Through Story Telling and Open Discussion
      Diagnosing the Aftermarket A to Z with Matt Fanslow: From Diagnostics to Metallica and Mental Health, Matt Fanslow is Lifting the Hood on Life.
      The Weekly Blitz with Chris Cotton: Weekly Inspiration with Business Coach Chris Cotton from AutoFix - Auto Shop Coaching.
      Speak Up! Effective Communication with Craig O'Neill: Develop Interpersonal and Professional Communication Skills when Speaking to Audiences of Any Size.
      Business by the Numbers with Hunt Demarest: Understand the Numbers of Your Business with CPA Hunt Demarest.
      The Auto Repair Marketing Podcast with Kim and Brian Walker: Marketing Experts Brian & Kim Walker Work with Shop Owners to Take it to the Next Level.
      Click to go to the Podcast on Remarkable Results Radio
    • By Changing The Industry
      Why Used Car Parts Can Be Risk
    • By carmcapriotto
      Thanks to our Partners, NAPA TRACS, and Today's Class Join Carm Capriotto and a panel of experts—Joe Marconi, Dan Buss, and Nick Salas—as they delve into the intricacies of selling your automotive repair business. This insightful episode covers everything from preparing your business for sale and understanding valuations to structuring deals and ensuring clean financials. Learn from seasoned shop owners about succession planning, transparent communication with employees, and navigating the emotional and professional challenges of ownership transitions. Whether it's asset vs. stock sales, working with valuation experts, or addressing staff concerns, this discussion equips you with the knowledge to maximize your business's value and ensure a smooth sale. Joe Marconi, Executive Council Member, Elite Worldwide. Auto Shop Owner. Joe’s Episodes HERE. Dan Buss, Elite Worldwide. Nick Sallas, Sallas Auto Repair, Kansas City Show Notes Watch Full Video Episode Importance of Transparency (00:02:18) Joe Marconi on Readiness (00:03:13) Succession Planning (00:05:16) Successor Challenges (00:06:40) Selling Experience (00:08:11) Valuation Discussion (00:09:51) Multiple Valuation Explanation (00:10:37) Advice on Business Preparation (00:12:18) Challenges of Selling a Business (00:13:23) Cultural Implications of Cash Transactions (00:14:43) Building Generational Wealth (00:16:25) Understanding Succession Planning (00:17:03) Emergency Plans in Business (00:20:37) Importance of Professional Advisors (00:22:34) Emotional Impact of Selling a Business (00:28:43) Contracts for Key Employees (00:32:05) Transparency in Hiring (00:33:07) Interview Questions for Potential Hires (00:34:15) Structuring Business Sales (00:35:38) Maintaining a Business Plan (00:37:12) Dealing with Tire Kickers (00:38:04) Evaluating Business Offers (00:39:19) Importance of Clean Financials (00:40:22) Value of Independence in Business (00:41:21) Goals for Business Sellability (00:42:32) Preparation for Selling (00:43:08) Maximizing Business Value (00:43:54) Purpose and Succession Planning (00:45:26)
      Thanks to our Partner, NAPA TRACS NAPA TRACS will move your shop into the SMS fast lane with onsite training and six days a week of support and local representation. Find NAPA TRACS on the Web at http://napatracs.com/ Thanks to our Partner, Today's Class Optimize training with Today's Class: In just 5 minutes daily, boost knowledge retention and improve team performance. Find Today's Class on the web at https://www.todaysclass.com/ Connect with the Podcast: -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Join Our Private Facebook Community: https://www.facebook.com/groups/1734687266778976 -Join Our Virtual Toastmasters Club: https://remarkableresults.biz/toastmasters -Subscribe on YouTube: https://www.youtube.com/carmcapriotto -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on X: https://twitter.com/RResultsBiz -Visit the Website: https://remarkableresults.biz/ -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -Special episode collections: https://remarkableresults.biz/collections The Aftermarket Radio Network: https://aftermarketradionetwork.com/ Remarkable Results Radio Podcast with Carm Capriotto: Advancing the Aftermarket by Facilitating Wisdom Through Story Telling and Open Discussion. https://remarkableresults.biz/ Diagnosing the Aftermarket A to Z with Matt Fanslow: From Diagnostics to Metallica and Mental Health, Matt Fanslow is Lifting the Hood on Life. https://mattfanslow.captivate.fm/ Business by the Numbers with Hunt Demarest: Understand the Numbers of Your Business with CPA Hunt Demarest. https://huntdemarest.captivate.fm/ The Auto Repair Marketing Podcast with Kim and Brian Walker: Marketing Experts Brian & Kim Walker Work with Shop Owners to Take it to the Next Level. https://autorepairmarketing.captivate.fm/ The Weekly Blitz with Chris Cotton: Weekly Inspiration with Business Coach Chris Cotton from AutoFix - Auto Shop Coaching. https://chriscotton.captivate.fm/ Speak Up! Effective Communication with Craig O'Neill: Develop Interpersonal and Professional Communication Skills when Speaking to Audiences of Any Size. https://craigoneill.captivate.fm/
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      Podcasting isn’t about having all the answers—it’s about sharing the journey. In this episode, we tackle the hard truth: Podcast hosts don’t have it all figured out. From the insecurities of giving advice to the challenges of staying authentic, we explore what it really means to put yourself out there as a host.
      You’ll discover how to sift through advice, find what works for you, and embrace the imperfect process of learning and leading. If you’ve ever felt like you don’t have it all together, this episode will remind you—you’re not alone.
      Listen in for an honest discussion about navigating the auto repair industry, embracing authenticity, and growing through the challenges of imperfection!
      Thank you to our friends at RepairPal for providing you this episode. RepairPal’s Certified
      Network of shops are trusted by millions of customers each month. Learn more at
      RepairPal.com/shops
      Are you ready to convert clients to members? App fueled specializes in creating custom apps tailored specifically for auto repair businesses. Build client loyalty. Get started today with your own customer loyalty app. Visit Appfueled.com
      Lagniappe (Books, Links, Other Podcasts, etc)
      https://shopmarketingpros.com/ep-118-doing-video-every-day-for-a-month/ - Episode 118 VEDA
      https://agencyanalytics.com/blog/how-profit-first-helped-this-agency-scale - Profit First Was the Key to Our Agency’s Financial Transformation
      https://shopmarketingpros.com/ep-125-its-ok-to-dream-big-stop-playing-small/ - It’s OK to Dream Big (Stop Playing Small)
      Show Notes with Timestamps
      Introduction to the Episode (00:00:01)  Brian introduces the podcast and sets the theme about podcast hosts not having all the answers. Inspiration from Mike Allen's Post (00:00:10)  Discussion on how Mike Allen's humorous post sparked Brian's reflections on podcasting and advice-giving. Brian's Insecurities as a Host (00:01:15)  Brian shares his personal insecurities regarding his role as a podcast host and influencer. Critique of Influencers (00:02:26)  Brian expresses frustration with influencers who claim to have life figured out, relating it to his experiences. Sharing Personal Experiences (00:03:33)  Emphasis on the importance of sharing personal learning experiences rather than presenting oneself as an expert. Struggles with Advice-Giving (00:04:36)  Brian discusses his ongoing struggles with the advice he shares in his podcasts and posts. Imposter Syndrome (00:05:37)  Brian reflects on feelings of imposter syndrome when sharing advice on managing expenses and business practices. Going Against Popular Opinion (00:06:46)  Brian talks about the challenges of discussing unpopular business opinions and the reactions he receives. Sponsor Promotion: RepairPal (00:08:54)  Brian promotes RepairPal and its benefits for auto repair shops seeking new customers. Sponsor Promotion: App Fueled (00:09:55)  Introduction of App Fueled and its services for building customer loyalty apps for auto repair businesses. Rewarding Success Stories (00:10:59)  Brian shares the rewarding experience of hearing success stories from listeners implementing his advice. Discernment in Advice-Giving (00:12:03)  Brian advises listeners to discern the credibility of advice from various influencers and podcasters. Conclusion and Reflection (00:13:10)  Brian wraps up the discussion, emphasizing the importance of honesty in sharing experiences and insights.
      How To Get In Touch
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - podcast@shopmarketingpros.com
      Click to go to the Podcast on Remarkable Results Radio


  • Our Sponsors



×
×
  • Create New...