Anyone in automotive aftermarket that can help with basic info?

[WhatExit?]

Good morning. I have a customer that is not in the US (not Chinese). They want to start selling to this market - they manufacture automotive aftermarket products for on and off road vehicles.

My question is simple: I need help in understanding the pricing structure / tiers work in the automotive aftermarket - the typical percentages starting with the top/highest price: MSRP. I can reach out to SEMA for their help but I thought I'd get better help here. Thanks in advance for any help you can provide!

They need to set their pricing soon and it has to be able to support the necessary discounts for the various layers. I found this online - don't know if it's correct or complete and I have no idea what the percentages/discounts are off of MSRP or MAP:

• WDs are wholesale distributors. They buy large quantities of parts from manufacturers and then warehouse them. WDs resell these parts to retailers and shops that do installs (aka jobbers).
• Jobbers are shops that sell and (usually) install parts.
• Retailers and eTailers are shops that sell parts (online or offline or both), but that do not offer installation.

Link to this and more info: https://www.rpmware.com/blog/sales-and-marketing/a-quick-guide-to-auto-parts-pricing

 

[monkeyswrench]

Depends on product type and retail costs. A way that was common to research in the old days, was to call a supplier of like parts, and get info on starting a dealership. Depending on the product, and manufacturer, it may be easier to just set up one "distributor" in each country they want to sell in. This limits the manufacturer contact with people, and makes shipping much easier to calculate and facilitate.

 

[batterup]

I specialize in insuring automotive aftermarket parts and insure some of the largest manufactures and distributors in the industry. I can't help with their pricing, but can make some connections if needed.

 

[DalesSpeed]

Good morning. I have a customer that is not in the US (not Chinese). They want to start selling to this market - they manufacture automotive aftermarket products for on and off road vehicles.

My question is simple: I need help in understanding the pricing structure / tiers work in the automotive aftermarket - the typical percentages starting with the top/highest price: MSRP. I can reach out to SEMA for their help but I thought I'd get better help here. Thanks in advance for any help you can provide!

They need to set their pricing soon and it has to be able to support the necessary discounts for the various layers. I found this online - don't know if it's correct or complete and I have no idea what the percentages/discounts are off of MSRP or MAP:

• WDs are wholesale distributors. They buy large quantities of parts from manufacturers and then warehouse them. WDs resell these parts to retailers and shops that do installs (aka jobbers).
• Jobbers are shops that sell and (usually) install parts.
• Retailers and eTailers are shops that sell parts (online or offline or both), but that do not offer installation.

Link to this and more info: https://www.rpmware.com/blog/sales-and-marketing/a-quick-guide-to-auto-parts-pricing

From a traditional speed shop point of view, WD is nearly the only way for anyone to be competitive. Jobber pricing is simply “baseline” in negotiating how deep of a discount a retailer can buy from a warehouse.

A warehouse selling to retailers at jobber is not a “deal” at all. Depending upon product, % off of jobber can often be as high as 30-50%.

MSRP is a joke for nearly everything as it is an overly inflated price hardly ever used. I do not know anyone in the parts business that can sell at MSRP.

MAP pricing is relatively new and nearly the only saving grace to allow smaller businesses to compete with Summit, Jegs, 4 Wheel Parts, etc without having to completely slash all margins.

For example, I used to lose money every time I sold an Edlebrock carb and the customer paid with a credit card. The thought process was that the customer got what they needed from us same day and often bought many small parts that go with it (and hopefully we have a repeat customer) as we were “the same price as mail order” on the big item.

MAP pricing now would allow me to sell that carb for a larger margin that is now protected by the manufacturer. (Mail order can’t advertise/sell the product below MAP)

Feel free to pm me if you want.

 

[RaceTec]

What Dale said above is correct... We have 5 pricing levels with Retail being a joke and Jobber being a guy at home in a garage calling us... Super competitive now a days and kind of BS with everything online and the big warehouses beating smaller companies up for margin. You can email me with any questions Jeremy@RaceTecPistons.com

 

[lbhsbz]

I've been in the aftermarket parts business for 20 years...It all depends on what your client is selling and how much other competition exists. Margins have been dropping lately as more players flood the commodity markets. Send me a PM with more info and I might be able to guide you in the right direction

 

[bonesfab]

it used to be a three tiered system Retail, jobber and wd. retail hasn't meant shit in years. now with the internet jobber doesnt mean a whole lot either. it seems to be pretty much wholesale and retail. some manufactures actually do a good job protecting their pricing but not many. I am a Wd for a few different manufacturers and have been in the industry for 30 years now. Pricing structure used to be around 20% from retail to jobber and about 25-30% from jobber to Wd.

 

[LargeOrangeFont]

From a traditional speed shop point of view, WD is nearly the only way for anyone to be competitive. Jobber pricing is simply “baseline” in negotiating how deep of a discount a retailer can buy from a warehouse.

A warehouse selling to retailers at jobber is not a “deal” at all. Depending upon product, % off of jobber can often be as high as 30-50%.

MSRP is a joke for nearly everything as it is an overly inflated price hardly ever used. I do not know anyone in the parts business that can sell at MSRP.

MAP pricing is relatively new and nearly the only saving grace to allow smaller businesses to compete with Summit, Jegs, 4 Wheel Parts, etc without having to completely slash all margins.

For example, I used to lose money every time I sold an Edlebrock carb and the customer paid with a credit card. The thought process was that the customer got what they needed from us same day and often bought many small parts that go with it (and hopefully we have a repeat customer) as we were “the same price as mail order” on the big item.

MAP pricing now would allow me to sell that carb for a larger margin that is now protected by the manufacturer. (Mail order can’t advertise/sell the product below MAP)

Feel free to pm me if you want.

I'n my experience with the MAP model (outside of the automotive industry), the Jegs and Summits of the world get kickbacks every quarter or year from the MFG in the form of marketing dollars, etc. Is this true in the automotive industry?

 

[Laguna]

I'n my experience with the MAP model (outside of the automotive industry), the Jegs and Summits of the world get kickbacks every quarter or year from the MFG in the form of marketing dollars, etc. Is this true in the automotive industry?

Only if you use there standard contract we don't give anyone kickbacks and we sell to Summit, 4 wheel parts and all other big WD. You have to hold your ground if you have a good product, don't compete against inferior product and hold your MAP pricing there should be margins for everyone involved. Problem is when the WD ask you to drop you MAP pricing then it becomes a free for all and will only benefit them.

 

[SBMech]

Pricing Matrix is a touchy subject for every shop (installer or jobber).

Depending on how good you are as a salesman, how you market your business and expertise, and how hard you walk the talk (comeback ratio, warranty work, comps), changes drastically how much you can charge for parts.

Dealers charge MSRP + a premium or a small discount over MSRP set from the manufacturer, depending on where you are at, and how steep the competition is.

I get 20% base off from any dealer I work with (the standard deal set eons ago) for factory parts. That allows me a 20% markup minimum to make a small profit.

Most successful shop owners take what they can get, and will use the cheapest parts available to make the most profit...duh.

To reach the point where you can set your own pricing requires a golden tongue, and a damn near 0% come back rate to sell it.

I can and do charge RETAIL for most parts installed. It's absolutely possible. Do not let shitty mechanics and crappy business men tell you otherwise.

WD-Jobber relationships allow me to make 60% to 150% profit on OEM parts, and I seek those WD's who strive to meet that margin, they know the deal.

They will compete between themselves, and you profit.

If you are bringing a new line in, it better be SUPER affordable with CRAZY good dependability and warranty, there are established OEMS who work the aftermarket HARD....

IMC, Worldpac, SSF, PPI, Pelican (they are not competitive atm, too big from internet) etc.

Lets say a Retail 2015 Tacoma 2wd front brake rotor is 109.65 retail...you have options from 65.77 (Akebono OEM) down to 28.87 (World Brake) etc.....

As you can see, most of us are looking to make at LEAST 60% markup in most cases with volume discounts you can do %100 on OEM...if you cannot do that, you will die on the vine.....

IMO I'll take a chance on a part I can make 80%+ on, but if I have to warranty it even once, it's out.

 

[rivermobster]

it used to be a three tiered system Retail, jobber and wd. retail hasn't meant shit in years. now with the internet jobber doesnt mean a whole lot either. it seems to be pretty much wholesale and retail. some manufactures actually do a good job protecting their pricing but not many. I am a Wd for a few different manufacturers and have been in the industry for 30 years now. Pricing structure used to be around 20% from retail to jobber and about 25-30% from jobber to Wd.

Remember when there were Yellow, Green and Blue sheets for looking up parts pricing??

Nobody makes money on parts anymore in the reselling business.

The internet fixed that for good. And Amazon is making billions making sure nobody else makes a dime.

Crazy times.

 

[WhatExit?]

Thanks everyone, for sharing your experience and input.

Here's the thing, this company is a manufacturer of high-end products. There's plenty of competition from other high quality manufacturers down to the bottom-feeding Chinese shit products. But they sell based on quality and their products aren't cheap.

They want to enter the US market and need info on how to plan their pricing. What levels/layers and discounts will they need to account for for each of them?

Starting at the top with MSRP and going down from there.

They want to be able to sell their product direct online at the start to gain some traction and build their brand while leaving room to work with all the distributors/levels and give them their cut.

What discounts for each of the levels do they need to plan for (build in)?

Thanks!

 

[SBMech]

Thanks everyone, for sharing your experience and input.

Here's the thing, this company is a manufacturer of high-end products. There's plenty of competition from other high quality manufacturers down to the bottom-feeding Chinese shit products. But they sell based on quality and their products aren't cheap.

They want to enter the US market and need info on how to plan their pricing. What levels/layers and discounts will they need to account for for each of them?

Starting at the top with MSRP and going down from there.

They want to be able to sell their product direct online at the start to gain some traction and build their brand while leaving room to work with all the distributors/levels and give them their cut.

What discounts for each of the levels do they need to plan for (build in)?

Thanks!

Do they build for any Manufacturers atm? That is a driving force in decision making for me personally.

Behr, Nissen, Akebono, Aisan, Royo, Delco, Motorcraft, Mopar, Delphi, Denso, Bosch etc have all earned their place at the table for several reasons.

They fit right the first time, they are the Original Equipment Manufacturer for their respective companies, they have better warranties, and for the most part you can expect them to last at least 10x as long as aftermarket trash from china. Not that some of their own products are not made there, but they are a higher quality at least.

I can depend on them to make it out of my warranty period at the very least.

It's a real hard sell when you have a replacement failure after 12k , when the original part went 220k.

PM me if you would like to speak further or ask an opinion on exactly what they are trying to break in.

 

[Havazoo]

Hummm….

 

[lbhsbz]

Thanks everyone, for sharing your experience and input.

Here's the thing, this company is a manufacturer of high-end products. There's plenty of competition from other high quality manufacturers down to the bottom-feeding Chinese shit products. But they sell based on quality and their products aren't cheap.

They want to enter the US market and need info on how to plan their pricing. What levels/layers and discounts will they need to account for for each of them?

Starting at the top with MSRP and going down from there.

They want to be able to sell their product direct online at the start to gain some traction and build their brand while leaving room to work with all the distributors/levels and give them their cut.

What discounts for each of the levels do they need to plan for (build in)?

Thanks!

When no competition exists...every step should double their money.

Your cost from the factory=$5
Your sale price to the WD = $10
WD sells part to shop = $20
Retail = Somewhere north of $20.

That leaves room for incentives/discounts

In the real world though, we have to look at competitor pricing and position ourselves to be in line. That means losing money in some cases and making a killing on other part numbers. Operating costs also play a roll. If the company is spending tons of money on R&D and cataloging and all kinds of other stuff...they've got a ton of overhead to pay for, so that needs to come into account. Others who take parts that that company developed and simply reverse engineers them and copies that company's cataloging have considerably less overhead and can come in cheaper, and fucks everyone else.

If they're selling direct, start out high...using the example above...$25-30 to leave room for everyone to get a big enough piece of the pie once they start dealing with a distributor chain. It's easier to drop prices than it is to raise them.

EDIT: I love MAP pricing, but it is a pain in the ass to enforce when your resellers are not your direct customers. Example....A manufacturer will have large WD customers who sell on to smaller distributors (local privately owned auto parts store) who don't do much volume, and that manufacturer might also sell direct to larger distributors (like Summit or Jegs) who do large volume. The manufacturer has no relationship with the little parts store in many cases, and has know way to even know what WD is supplying them, so it's tough to enforce MAP.

 

[SBMech]

They want to be able to sell their product direct online at the start to gain some traction and build their brand while leaving room to work with all the distributors/levels and give them their cut.

IMO they have a tough road ahead using that strategy. There are multiple WD's already set up to move product, jumping right to retail online will alienate any sort of markup for installers, and DYI's are a terrible market to try and jump into with Vatozone, Dipshit-Retard-And Twat, O-Nothing etc having massive market share already.

 

[stevel]

Your parts margin need to high enough to support you desired net margin. Auto repair business are really two different businesses a parts business and a labor business. Parts should be between 40 to 50 percent of total sales. The best shops are averaging 50 to 60 percent profit margin on parts. not mark up but margin. That may seem high to some but for the shop to net 25 to 30 percent profit that is what it takes. The same numbers work for labor. The shop should be making 60 margin on loaded labor costs.


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