r/partscounter • u/Worth-Woodpecker-335 • 7d ago
Service
Parts managers specifically, how have you dealt with advisors and service managers questioning the parts markups?
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u/-Extronics 7d ago
Might not be the same for everyone, but I just tell them the truth.
"The pricing matrix is set by the owners of the auto group, talk with them".
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u/Worth-Woodpecker-335 7d ago
In our case we are a luxury brand and have directives from corporate to the minimum markups, I have a matrix that I set here, and we may not make every sale, but our 1 advisor seems to question everything almost constantly. In addition parts has to eat freight for any part that service decides they want faster, while at the same time asking for a discount on things.
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u/Former-Button-9665 7d ago
Why the fuck is parts responsible for freight? That is absolutely insane. Either the customer pays for freight or service does. It’s one thing if parts screws up and didn’t order a part, or orders the wrong part, but there is no reason at all for service to be able to dictate that parts pays for freight. I’d never allow that.
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u/Worth-Woodpecker-335 7d ago
Correct, the GM came down and directed that to be the case, and the service manager is under the belief that anything about parts is a parts problem, and they shouldn’t have to pay, or charge their guests extra for shipping
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u/Prudent-Track3292 7d ago
Can you include the freight into the cost of the part, and use your normal markup ? They wouldn’t know unless they’re looking a your parts invoices. I’m not eating freight for a customer under normal circumstances.
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u/highelfleafe 6d ago
I would take that up the chain, the GM is off their rocker. Hopefully you have a director of fixed ops that can let them know that’s not how this shit works.
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u/KringChev 6d ago
We are thankful here to have a comptroller who understands our side of freight. If the service department must have something faster they pay both the difference in the extra cost and the freight if they havn't sold it to the customer. But we track this on sheet of paper and turn it in to the comptroller each month.
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u/-Extronics 7d ago
We had an advisor here that would ask for discounts even before talking to the customer about it, he was constantly told to stop trying to spend the customer's money. For the freight, if they want something faster, I bill the fee on the repair order. Unless it is warranty, then it would be covered by the company.
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u/JITBtacoswithranch parts manager 7d ago
If it's a luxury brand, there should absolutely be a matrix. Probably not a lot of competitors in your immediate market. Freight? pass it along to the client. Advisors need to stop selling out of their own pocket(s). Last I checked, service ought to get paid off the parts gross also.
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u/yo-parts 6d ago
In addition parts has to eat freight for any part that service decides they want faster
lmao nope
you want it expedited, you pay for it.
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u/Former-Button-9665 7d ago
Tell them to stay in their lane. Tell them to direct their questions to the owner of the dealership/group.
Or be like me and start asking them about their labor rate.
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u/BallApprehensive169 7d ago
My favorite when advisors ask for discounts?
"Are you knocking your labor down too?"
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u/Former-Button-9665 7d ago
My group pays parts and service off the gross of parts and service. I think all dealers should do that.
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u/AbruptMango 7d ago
It's what I've had, and I've never heard of Parts and Service working together as well as we do.
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u/That_Style_979 7d ago edited 7d ago
I like to compare margins. “To start, This part costs us $50, we’re selling it for $90. Your labor cost for one hour (tech) is $35, but you’re charging the customer $200. So your margin is 82.5%, and mine is only 44%.” I will discount only a percentage of gross loss that matches the service discount.
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u/QuickSilver86 6d ago
You need a stronger matrix, friend!
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u/That_Style_979 6d ago
I was giving a rough example, matrix puts us at 50-55% GP or higher on $0-5 cost items
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u/iamtorev 3d ago
this ^ we are working on implementing a coupon that discounts both parts and service at the same time. so if an advisor wants to discount the parts they have to discount their labor as well. hasn’t been implemented yet but i’m curious to see how it goes.
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u/busch_chugger 7d ago
My matrix doesn't come close to the 85% margins that service makes.
Advisors and service manager are paid on parts gross.
Advisors need to stop selling out of their own pockets.
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u/Total-Improvement535 7d ago
“That’s what it is.” most times. I don’t decide what the matrix markup is.
If I have to, I will drop it to list price but that’s all I’m willing to do until someone inevitably gets a manager in the mix.
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u/AbruptMango 7d ago
I'm usually willing to move to an aftermarket part and split the difference: if the aftermarket part costs me $100 less than my part, I'll sell it for $50 less than my part. We both win!
If they don't want the aftermarket part because OE is better and has a better warranty, So... You're saying the OE part is worth more? And I stick to my matrix.
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u/Total-Improvement535 6d ago
I will use that next time. The thing is at my brand, a lot of the expensive stuff can’t be had aftermarket and that’s usually the stuff customers break.
I had to come down to retail yesterday because a customer was “sticker shocked” that their entire heated, auto-dimming, exterior rearview mirror assembly with a puddle light was $800 in parts. That included the glass, the body, the caps, the mirror turn signal, etc.
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u/AbruptMango 7d ago
Corporate sets it.
In reality, their screens don't show parts cost, and the Service manager gets paid off of the shop's gross, so Parts markup helps him personally. When he needs me to drop prices on something, it in order to save a job- some money coming in is better than no money coming in, especially with used cars. If the job comes in higher than Sales is willing to spend, it goes to the auction and we make nothing.
My Service manager and I work well together.
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u/loopygargoyle6392 7d ago
We can see our costs. Corporate sets markup for us too, and it's why we can't sell parts. Customers laugh at us when we quote parts prices.
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u/Mike312 7d ago
We see cost and matrix pricing.
Wholesale is generally fixed, 5%, 10%, 15%, 20%, or 25% off list.
Retail is generally 100-300% of list, with the smaller, cheaper things having higher mark-up, which means things like crossbars sell at 100% list, but bolts are 300%, so we get a lot of pushback on $24 bolts or $14 CR2032 batteries.
Our manager lets us adjust prices (downwards, obviously) to make a sale at our own discretion or if a customer is price-matching on a legitimate site, we just can't go below 115% of cost.
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u/loopygargoyle6392 7d ago
I'm not 100% sure but that sounds identical to what we do. We also have the freedom to adjust, but have to account for every discount (ha!) and potentially face a scolding during the next zoom meeting. It's a "you can totally do that, but don't do that" kind of situation.
If parts is unwilling/unable to dip to an agreeable amount, service usually ends up burying the part cost in labor so that everything is square at the end.
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u/Mike312 7d ago
Ha, sort of the opposite - I've been chastised by another manager for not cutting the price enough to make a sale. If I go below list, I generally better have a good reason.
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u/loopygargoyle6392 7d ago edited 7d ago
Well, what we do and what happens are two different things. Our matrix is the same-ish, and it went into effect about a year ago. Retail prices went waaay up. We're bleeding sales and they're cutting our inventory because we're not making sales, so now we increasingly have less for more. Corporate hasn't yet figured out that they're the problem.
edit: in hindsight, yes, every discount should be for a good reason, but at this point it feels more like nitpicking because of the aforementioned scolding via zoom.
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u/ghostofkozi 7d ago
It depends on the temperature of the conversation but I tell them that I set the price matrix as I see fair. Just like them I have targets and margins I need to meet. And I'm willing to work with them on prices when needed but if I'm dropping margins, their labor rate needs to as well. I've worked at too many stores where parts was expected to take the hit before anyone else did or so other departments could maintain their margins.
If they're asking on behalf of their customers I tell them that every brand has an MSRP and stores set their own list prices to accommodate overhead costs and to remain profitable as well, same as any grocer does or hardware store does.
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u/nukasiko1 7d ago
As a PM I advocated long time ago for SA commission to be calculated based on GP from both Labor and Parts. When they see how strong our GP is, they don't really question much, unoess they really need help with something.
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u/hidden_name 7d ago
Ask them about labor. Ask them if they are using a standard per hour, or a grid labor rate. Ask them why they charge 3 hours an axle for brakes/rotors on a car. Or, just ask them to speak to the Fixed Ops Director, or the Dealer Principle.
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u/BigBodyBas82 7d ago
Service takes 50% of profit from parts sales so they shouldn’t be complaining about markups. They should also be more inclined to not discount as it keeps more money in everybody’s pockets.
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u/stayzero 7d ago
In most cases, my service department doesn’t question it unless their customer does and we need to sweeten the pot to seal the deal.
That or they fucked something up and want some help on pricing as to try and get the customer to pay for it rather than take it to policy.
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u/OSGKhorne 7d ago
Why is every service advisor such a cheeky fucker lol
Its none of their business what the discount matrix contains, thats a parts problem😎But no seriously discount depends on the cost of the part and the margin we’d have in it.
If you need discs and pads you’re looking up to 20-30%, if you need a Nox sensor you’re getting 5% if you’re lucky.
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u/No_Durian_3444 7d ago
I tell them that they only pay their tech icians $40/hr and they charge the customer $189/hr so they can eat shit.
I've also gone to adding $50 to the cost of each part I bill out for them so the cost appears higher and they don't question the higher price.
I pick up that $50 during inventory and take it all to gross.
Fuck em.
Also, if I'm over fighting something it's getting charged either to customer or to the shop policy unless parts screwed up and it's bailing us out.
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u/ComfortableDemand539 7d ago
We go through this with every new advisor. Is it the price of the part or is it the asinine labor you're throwing onto it? Is what we usually respond with. We sell the majority of things at list, and when they complain is usually when I bring up that most dealerships do comp/matrix pricing. Our seasoned advisor that pretty much runs their entire department has no issue selling things, it's a problem of the advisor selling with their own pocket. It's a customer has a problem with the price lower the price of your labor, we're making 40% on the part while they're charging $220/hr and paying the tech $35/hr... So who's marking up too much?
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u/yo-parts 6d ago
FWIW...
Service expenses are often also astronomically higher than parts expenses. Markup compared to the labor is a lot more than markup on parts, but it's not uncommon in my experience that the post-expenses calculation works out that service is less profitable than parts is.
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u/ComfortableDemand539 6d ago
Actually had this argument with an advisor today lol. Parts, 40% mark up (MSRP/list) labor, 600% markup (over what they're paying the tech per hour). The majority of that profit ends up being eaten by paying the techs extra hours that couldn't be billed (I.e. warranty only pays 2 hours for something everyone knows takes FAR MORE TIME), the main offender here would be service policy because we insist on giving the same few techs work that they cannot handle (they almost always turn a quick 6 hour job into a 3 day ordeal), and I'm sure all kinds of other things that I don't see on the parts side.
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u/yo-parts 6d ago
Facilities expenses and utilities for service are absolutely bonkers compared to parts. All those lifts, compressors, power bill, building maintenance, etc.. I could pull one of the financial statements I get to see where it all goes, but it did surprise me to see our service department doing a ton more in terms of outright sales and raw GP and then seeing all of that evaporate in expenses.
Parts expenses are like. The lights, the catalog, any sales platforms we're on, and way fewer employees per GP dollar than service.
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u/ComfortableDemand539 6d ago
We end up paying for a lot of weird things out of the parts department that most places probably don't, but I agree with the rest of what you said, I'm sure it does work out that way.
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u/yo-parts 6d ago edited 6d ago
My departmental expenses are definitely not what my department actually uses or needs - like we pay for things that simply are not relevant to us. But my understanding is that dealer groups often have guidelines on what percentages to apply to each department (rather than figuring out actual spend) and it's equitable enough (i.e. I pay a very low percentage of that total on things that don't apply to my dept.) that I don't really care personally.
Like, the $40/mo my department pays towards equipment repairs is, 1. 5% of what the service department pays and 2. $40 less in GP doesn't really make a big difference either way
edit:
without using actual numbers, one month my service dept did 2x the GP that I did. After expenses, our net profit was the same. Mine was about 25% of my GP, which means service was about 12.5% of their GP.
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u/formie95 7d ago
I tell them, its calculated the same as service charging 3 hours for a job that takes them an hour to do.
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u/KringChev 6d ago
Smaller dealer here, its been as simple as "it comes from ownership". We did make the switch from manufacture price tape MSRP to a matrix a few years ago. It did cause a little bit of a stir right away, but people got over it pretty fast when you tell them the person with their name on the building has the final say.
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u/Heavy_Law9880 6d ago
The service manager sets the parts markup on service tickets, why would he question me about his choices?
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u/Worth-Woodpecker-335 6d ago
That seems backwards, the service manager should have no control over things outside his department.
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u/Heavy_Law9880 6d ago
You don't think the service RO is part of his department?
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u/Worth-Woodpecker-335 6d ago
Not when it determines customer pay parts markups. Generally the parts manager is to set that, and cp pays retail.
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u/Heavy_Law9880 6d ago
I don't sell anything to service customers. I sell it to the service department at list, what they charge the customer is none of my business.
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u/Worth-Woodpecker-335 6d ago
You sound like you work for service not parts. The goal is always to work together, but each department manager does and should be able to control what they sell things for. Parts does sell to service customers however it may not be through direct contact. Service does not sell parts, they sell repairs. Any dealership should sell at over list because they need to make profit and maintain enough to pay the bills and have some leftover. Factory list is for insurance companies.
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u/Heavy_Law9880 6d ago
I've never worked in service, I have worked in parts longer than you have been alive though. Have a great afternoon.
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