Parts margin legality

[ATLAuto]

I was talking with a shop owner near us, and the topic of Parts Matrix pricing came up. I casually asked him what type of margins he typically got on parts. He replied, "we just charge list price on all parts. Whatever the customer would pay at the parts store, we charge." Shocked, I asked him how he kept the doors open with such low margins (15% roughly). He replied, "well, you know it's illegal to markup more than 50%, right?" I said, no, I've actually never heard of that in my life. I asked him where he heard that from, and he looked at me like that is common knowledge to everyone, and I should be in jail right now for matrixing our parts.....!

 

Has anyone ever heard of this law, ever, anywhere??

[b1qwkbird]

No I don't see why that would be the case. Not yet anyway!!! We are in the parts selling business as well and as you mentioned, we need a matrix to keep the doors open.

[mspecperformance]

Errrrrrr..... why would it be illegal??? You can list anything you want for however much you want (for the most part). It must be really tough living life being so ignorant...

[5 Star Auto Spa]

Never heard of a limit on how much you can charge for parts........

[xrac]

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[xrac]

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[lmcca]

but what did he say when you asked him that?

 

and, theres no law ive ever heard of about that either

[KMS]

That is one of the dumbest things I've ever heard. You can charge whatever I want. You think the bottle of water you buy at the store really costs them $1.00 and they sell it to you for $2.00? I bet it costs them around $0.05, maybe! Almost every business owner would be in jail.

[ATLAuto]

Agreed all around. I didn't push the argument with him, since it would have fallen on deaf ears ...

[Mario]

The other shop owner is more then likely mistaken. However, I have seen odd things pushed on auto repair shops/dealers.

 

In my state the used car dealers have to clearly mark a car As-Is or with a full or limited warranty on the window. I had a dealer (one of our frequent customers) sell a used Ford Escape (2003ish) to a customer As-Is. The customer who bought the car compalned months later that the rear shock towers were rusted. These shock towers are covered up by plastic and carpet on the inside. They are not visible from inside or outside the vehicle without disassembly and removal of the plastic componets. The State Att. Gen. Office sent him a threatening letter that if he didn't refund the money for the vehicle they would take legal action against him!

 

After I was told this I jumped on the State AG website and they have a lot of harsh media programs going towards used car dealers. I don't believe the used car dealer did anything legal, and he honestly didn't know about the towers. The vehicle was not inspected by the buyer at a shop before the purchase, and honestly which shop removes plastic panels on an inspection, especially on the rear of the vehicle?

 

I wouldn't throw it past our state AG to threaten a shop owner if they charged "excessively" for auto parts.