Dealer pricing for 5 bolts and 3 O-rings

[bmwfnatic]

Never seen this kind of shit in Europe…

BMW sets MSRP here, which is the same for all dealers. And then the dealers compete with each other discounting based of MSRP…

[D-O]

Here is how dealership parts pricing works...

Cost is what the dealer pays.
Warranty cost is what BMWNA pays for a factory warranty claim - which I believe is changing or has changed since I believe BMWNA is contracting warranty claims out?
MSRP which is what you see online.
Wholesale is usually MSRP minus some % or cost plus.

Then what the OP got...that's called grid, matrix or retail. That is a markup above and beyond MSRP. It is pure dealership profit.

So a $10 part at MSRP will be about $6 to $7 at cost. Retail will be $15 or whatever that dealer wants to charge.

There is a similar cost structure for labor, financing, and everything else the dealer sells. A massive markup on the markup. I saw salespeople sell $130 window tinting for $500.

"It is pure dealership profit."

Sort of. Its pure gross profit, which is then used to cover expenses.

In my experience pricing structures are based on cost structures. I can assure you that the overhead at a car dealership is staggering, even if they carry no debt burden.

Its also helpful to remember the dealer has only one supplier of parts and vehicles, and cannot shop around. The supplier controls both MSRP and cost and does not negotiate.

[Ramage]

That $10k watch next to your $1k sunglasses told him what he needed to know 😂


Sent from my iPhone using Tapatalk

Yep, that am I sporting a clunky contraption on my wrist and some absurdly expensive sunglasses I overpaid for at a fancy boutique? Or do you just reckon I’m a bit of a twit for broadcasting the cost of my gear?

Either way, cheers for the chuckle! 😄

Way back when I was peddling cars—feels like a hundred years ago—I’d chat to any UP on the lot. You never could tell who was ready to buy and who was just there to gawk and scuff the tires!

[PSUEng]

My local dealer parts counter is a scam just like the one OP was dealing with. For Genuine parts, I use BMW Mini Parts (BMW Store) in Cincy. Can't be beat IMO.

[6speedS54]

My local dealer parts counter is a scam just like the one OP was dealing with. For Genuine parts, I use BMW Mini Parts (BMW Store) in Cincy. Can't be beat IMO.

I typically get my parts from fcp or eeuroparts (luk clutch and flywheel) had excellent prices

[PSUEng]

I typically get my parts from fcp or eeuroparts (luk clutch and flywheel) had excellent prices

I also use FCP, and they are great. But, often I find I don't need the extra cost associate with the "lifetime" warranty and BMW Mini Parts is cheaper. I've never used eeuroparts, I'll check them out! I've also used E-ACCA.com from Latvia.

[George Hill]

Lots of auto parts and repair businesses use pricing structures that increase in markup percentage as the part decreases in price. It sucks and I don't price my parts that way, but the reality is that its same amount of man power to sell a $1 bolt vs a $100 part. You just can't make money selling parts at cost cost +30% if it starts at $.75 when you factor in overhead.

My dealer wholesale costs sometimes get washed out when I buy a $.50 o-ring as some parts even have a min price. So a part could have an MSRP of $.50 but the dealer has a minimum price of $1.50 (or whatever) so now I am paying 3x MSRP instead of a percentage under MSRP.

[bigjae46]

"It is pure dealership profit."

Sort of. Its pure gross profit, which is then used to cover expenses.

In my experience pricing structures are based on cost structures. I can assure you that the overhead at a car dealership is staggering, even if they carry no debt burden.

Its also helpful to remember the dealer has only one supplier of parts and vehicles, and cannot shop around. The supplier controls both MSRP and cost and does not negotiate.

Have you worked at a dealership?

The smart dealerships will look at throughput. Nothing kills a service dept like having have of your lifts tied up waiting on parts. A smart dealership wants to get throughput so they can stock more parts so your dealership can get more of what makes most of the profit - service labor.

Not to mention the cost of VOR parts shipping so you cam get the part and get the car out. Not to mention customer satisfaction which BMW pays massive bonuses for.

If the dealership stocks an N63 engine and one comes in for a recall…that’s a 3 day turnaround, 40 something hours of labor and lots of parts. But you don’t get to stock that motor if you’re not moving parts.

THAT is THE only reason you see dealers selling parts cheap online. It’s a little profit but I’m sure they have a lot fewer cars waiting on parts.

[D-O]

Have you worked at a dealership?

The smart dealerships will look at throughput. Nothing kills a service dept like having have of your lifts tied up waiting on parts. A smart dealership wants to get throughput so they can stock more parts so your dealership can get more of what makes most of the profit - service labor.

Not to mention the cost of VOR parts shipping so you cam get the part and get the car out. Not to mention customer satisfaction which BMW pays massive bonuses for.

If the dealership stocks an N63 engine and one comes in for a recall…that’s a 3 day turnaround, 40 something hours of labor and lots of parts. But you don’t get to stock that motor if you’re not moving parts.

THAT is THE only reason you see dealers selling parts cheap online. It’s a little profit but I’m sure they have a lot fewer cars waiting on parts.

Have you worked at a dealership? - Yes sir. For the past 39 years.

It is true that one of the primary drivers of service throughput is the parts department's off the shelf fill rate, but that is a function of inventory management, which is an entirely different subject from pricing. Pricing does have some effect on sales volume, but little to none on service throughput. Proper inventory management, in theory, is based purely on sales demand. In practice there are always constraints placed on inventory management.

Internet sales is yet another subject. In my opinion, it is a business best left to FCP Euro, etc.

On a much more fun note: While I have your attention, what is a good starting tire pressure for a Hankook R-S4? This weekend will be my first track day on them.

[D-O]

Lots of auto parts and repair businesses use pricing structures that increase in markup percentage as the part decreases in price. It sucks and I don't price my parts that way, but the reality is that its same amount of man power to sell a $1 bolt vs a $100 part. You just can't make money selling parts at cost cost +30% if it starts at $.75 when you factor in overhead.

My dealer wholesale costs sometimes get washed out when I buy a $.50 o-ring as some parts even have a min price. So a part could have an MSRP of $.50 but the dealer has a minimum price of $1.50 (or whatever) so now I am paying 3x MSRP instead of a percentage under MSRP.

"but the reality is that its same amount of man power to sell a $1 bolt vs a $100 part."

This is an important insight. Its often not how much a dealer pays for a part, but how much it costs them to sell it.

[D-O]

My local dealer parts counter is a scam just like the one OP was dealing with. For Genuine parts, I use BMW Mini Parts (BMW Store) in Cincy. Can't be beat IMO.

A scam is when you are the victim of fraud. A business offering you a price you don't care for is not a scam.

[PSUEng]

A scam is when you are the victim of fraud. A business offering you a price you don't care for is not a scam.

Thank you for the grammar correction, I should have chosen a better word to convey the contextual basis for my statement which is: the OP had gone through the price discovery process at that dealer and was shocked which is something I have often encountered, all to realize a MUCH--not slightly--but MUCH better price elsewhere to suggest I was being taken advantage of (only dealer in town, I need it tomorrow and only they have it, etc.).

Now, I realize a business is fully entitled to charge the most the market will bear. But, what would you call it when a dealer service counter charges a customer more for a part he otherwise could buy at the adjacent parts counter for less? Is that simply a pricing structure, or cost structure difference from counter to counter? Or is it some intentional way to squeeze a customer just a little more to get that max price? Greed maybe? Where is the line? Regarding dealers, which is where we are here in this discussion, I approach them all with skepticism and when I find one that is really honest and provides a great product/service, I support them and tell them about it. I finally found a BMW shop, and Toyota shop, where the parts department is the best I've ever encountered and I tell them, and buy from them.

Again, thank you for the correction and your insight into your experience with dealer operations.