355 values - I just don't get it

Heck, I worked for 24 years doing government contracts at cost plus fixed fee with fees of around 7%. Considering what shops charge for labor, marking up parts over retail is just adding insult to injury. They don't need to mark up over retail to make money. They make it all on labor. But that raises another question to ask the shop, "what to you charge for parts?" And come on, $14/quart for Mobile 1 motor oil? Come on.

 

Obviously I don't know what they need to charge. But if they need to mark parts up over retail, a) they don't know how to run a business and b) I'm not going there. Would you buy an iPhone from some one who walks in to an Apple store, buys one, marks it up, and tries to sell it to you? Bet you'd go to the Apple store. Nothing to debate. It's common sense.

 

Dave I believe Johns corrct even though I am totally guessing. They likely took ricambis price and added 10 points so they could make 20 or 30 points.
They did this because they are selling their name and the cost of Ferrari ownership.
I believe if the owner would have just asked the question onthe prices they likely could have got a bit off and maybe they did.
Noone knows the back story except the owner who brought it in.
If they feel they were treated fairly thats all that matters.

 

Factory dealers I have dealt with way back. Never charged me more than ricambis price.

 

@JohnK et al......

I have owned a successful automotive business for 25 years. I have enjoyed all facets of the business from mechanical, body, sales and activities in between.

A BUSINESS CAN CHARGE WHAT EVER A PUBLIC IS WILLING TO PAY. And lots of the public, 10’s of millions spend it with dealers, independents and shade tree mechanics at all levels, that they feel comfortable with. A business not run for profit or excessive profit, should get out of business, especially a C Corp.


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Labor pays for the job. That's where the money is. At $125-$150/hr that's $260,000-312,00/yr gross income for 40 hr a work week.

 

Usually not a problem they end up out of buisness without their choosing.

 

I disagree with you here John. In most cities with taxes etc 3 to 4 times what you pay an employee will barely make it work. The money in Ferraris is in the sales department charging over list price.

Dont get me wrong shops run properly will make money but not at the margins you I think are suggesting ie 40 percent or something.

I know you did not say it and I am guessing.

 

They put the car on a $4K lift, in a building that costs $8K/month. They probably pay an inventory/parts manager who makes sure that there's a supply of oil ready when it's needed, instead of driving to AutoZone to pick up 10 qts just for you. The work was done by a tech who bought $15K worth of tools out of his own pocket (who incidentally, probably made about $12 changing the oil). They pay an accountant to write up all the bill (that the customer hopefully pays.)

That's why the oil costs $14/qt.

 

My guess is dealer an indy would not do this for long. Word spreads fast everywhere.
A dealer of new or used in my guess.

 

I agree with Rob that a shop can charge what it want, but if you are trying to compete with a Ferrari dealer you better be able to at least match their prices on parts and labor and more often that not, be cheaper on lablor, at least on the mechanical side, IMO.

[edit] Come on guys, does that look anything like a dealer invoice?

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Well said

 

Sorry, Taz355. Not sure what you meant after quoting me??

Back to Johnk: The money is not in the labor, it is in all of it - parts, supplies, materials, shop equipment, training, tools. My average ticket for my Collision business as of this morning was $2014. We have run 1172 tickets this year so far. My gross profit was $1,097,000. We have 14 employees, 6 of which are under cost of goods sold - techs, so they pass through before the gross. The support staff, managers and parts guys come out of that gross, plus utilities, mortgage, insurance, Workers comp, advertising, building maintenance etc, etc. (about a 30 line GL statement for expenses.) Then I pay vacation pay, bonuses, holidays and so on out of that gross profit instead of keeping it. I also pay myself and as much as I legally can to mitigate corporate taxes and still show a profit. 3.5-5% right now.

A legitimate automotive operation sell parts at markup above list. The consumer can buy at list or less and install themselves. A business should negotiate the lowest wholesale price to earn a profit. When you factor in warranty (shop supported) loaner cars and additional amenities, you will see an “installed” price that can be over list, depending on what that part is. Called matrix pricing and used by most large dealerships and shops.

As a Collision business we work only from dealer list and make about a 28% average profit on parts we buy wholesale. Domestic are about 35%, Euro and Asian about 22-27%. Our industry is price fixed by insurance through illegal steering and rate suppression. I can drive 1 hour east of me and the insurance company pays $15 an hour more for labor. I can go to NYC and that labor is double mine, but a Ford, Nissan or Ferrari in any city is the same car to fix.

It is not complicated and I advise clients all the time on how they can save money. But if they come to me, I am going to charge them accordingly. Take on the burden of quality, warranty and technical expertise for a profit. I do not come to work for charity.


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Oh and I like the dialogue. Not trying to stir pot, but trying to respond with real data to support the cost. I personally believe dealerships over charge and do work unnecessarily, but the business model and pay structure supports it. The consumer looses.


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If I'm interpreting that invoice correctly, it appears the labor charge for checking the cooling fans was $0. Guessing it took more than zero minutes out of the shop's day...

 

It was inresponse to your last sentence

 

Rob touched the effect that insurance companies have on his rates; similarly, warranty work is a potential loser for the shop. The shop doesn't love it, because they have to prove to the Mfg that the repair was under warranty (long after you've driven away happily with no bill) - and of course, Mfg might not agree that it was a warranty situation. So the shop just eats those hours and those parts. The tech wasn't thrilled to replace your melted header, as he got paid less for that work vs a car NOT under warranty.

Beyond warranty work, labor calculations are just ... well, weird in this industry. Book vs Actual, Flat vs Hourly, and all that. Sometimes it works in the shop and/or tech's advantage. Sometimes it really doesn't, and they might wish you'd never brought your car in the door to start with.

 

I have gutted cats, extenders and never one check engine light.

Btw my light works. He is throwing parts at your car instead of trouble shooting it. Sorry but thats no expert hes a parts swaper on your dime.
You could do that yourself and save cash.

 

Well, you're wrong, since I've worked with him for over half a decade, but you have every right to be wrong.

 

Comments are worth the read [emoji16]


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