dudeluxe

I understand what you might be saying, but in today's environment and customers access to the Internet that 60 miles away is just a mouse click telephone call away. Customers will buy parts with a credit card from another dealer 60 or 1000 +miles away (done every day). Once a customer finds out that they are being gouged, they have memories like elephants the customer is lost for about a generation, retirement, sudden death. You are correct on customer loyalty (gone with the dinosaur) in many cases but not all. No matter what you do you can expect to loose 10% of your customers each year (price issues, company got bought out by a remote national account that likes another brand "mo betta", felt they were treated unfairly, etc). Why run the risks? It is your call for sure. But remember you need to add 12% or more new customers to grow. In a town of 15k people (customers) talk. I like in a county of 30,000 and everyone knows more than they should know.

Here are a few comments relative to some of your other statement - some of these are written w/ a bit of humor in mind.

1. A gross margin of 35-40% is an acceptable margin for parts per industry standards established by MHEDA (a dealer based organization), certainly the other profitable sections of the company are carrying their load - like service @60%, used at 40-45%, rentals 35%, allied sales 20-25% and new equipment ideally 5-8% but many say break even is acceptable - in today's market.

2. Distributor points for a Chevy at $16.00 is probably a fair price since they have been used in a auto since before "Hector was a Pup" and millions were produced then.

3. It seems for a town of 15,000 to have 18 muffler shops seems like total market saturation with suppliers - like 1 shop for every 833.33 man, women and child. Price competition would be fierce me thinks especially since muffler seem to last a long time now - I haven't replaced a muffler since 1963 on my 1951 Ford. Of course, all bets are off, if all 18 are owned my the same family.

4. I do repairs (that I can on my own cars) I was always under the impression the after market parts stores, like Advance, AutoZone, O'Relly's, NAPA, etc were very much cheaper than Ford (I prefer Fords - grew up in Detroit built 1964 thru 1967 Mustangs in the summer to pay for college). One day I could get the part from the after market guys so I went to the Ford dealer - they had it in stock & they were about 5% higher the lowest priced after market guys. I have been buying my parts from the Ford dealer since (after I compare prices - I am willing to pay 10-15% for a genuine part & have a bit of reassurance the part has the latest updates from Ford).

Also you will find the friendly ACE hardware man has better pricing on the same item that the HD & Loews do.

100% mark up!! i think you'll find certain uk companies are working at 120% mark up

The problem with this industry is that the manufacturers set the bar so low with profit margins on new trucks that when we can make 35% on a part we think that the customer is getting gouged.
When you consider that there may be only one place to get a part for a particular forklift truck within a 60 mile radius there should be a huge mark up.
I live in a town of 15,000 people and I can probably get a mufller for my car at 18 different places within a 10 mile radius and my guess is the average mark up is above 200%.
If we need a part today and have to buy it from a local parts store we pay big time. How about a set of Chevy points for $16 or a simple 4 cylinder distributor cap for $35. Not only are the ridiculously priced but the quality is bad.
Meanwhile, us forklift dealers think the better deal (meaning the least profit) we give our customers the more business they will give us. There's a saying for businesses that work on no profit: If you had a bigger truck you could make more money.
On another note, we are so proud of the brands that we represent and take a special pride that a particular customer uses our trucks, but you know what, if someone out of the blue asked the average business what brand of forklift(s) they use not only wouldn't they know, they don't even know what color it is. Some proud owners, heh!

Normandy,

In the States & I'm certain in the rest of the world it is not unusual to see the street prices of parts offered by authorized dealers to the end user at varing degrees of mark up above list prices established by the OEM (forklift, automotive & others). This has been going on for 41 years that I am aware. However, the % of mark up has grown significantly - used to be 10-15% mark up very common (to cover ship & handling costs), in recent years some "short term motivated" dealers mark-up up to 100%. The % of mark up on parts generally increases during "tough" times to "help" make-up for lower business levels in rentals, used & service. With the internet this is very risky as customers "shop" parts $ too. The OEM will have one list price for each market.

It is true that "propiterary" parts through teh OEM tend to be very, very high until a aftermarket parts company finds a way to market a similar or same part at a different price - that's what the free market is all about.

get used to it

It is even worse when you see the Same Part, with the Same Number from the Same Primary Manufacturer being offered by 3 different forklift companies with prices from $19, to 49 to 119. I kid you not.

If it is not criminal it is certainly immoral.

no wonder the trade is in a mess.