incentive to replace parts unnecessarily

Discussion in 'Parts, Maintenance & Servicing' started by Sp!ke, Sep 17, 2011.

  1. Sp!ke

    Sp!ke Administrator

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    I have a good friend that runs a workshop and therefore a little insight into the workings of the parts side of the business.

    I am aware of a couple of things that trouble me in the way many of the motor factors market themselves and whether it is in the interest of you and I the consumer.

    The first one is the price. Basically the garage pays one price with a discount applied but receive two invoices. One with the real price and one to show the customer with the discount removed.

    The other thing the motor factors do is run competitions. if you reach a particular target of parts orders you win prizes... plazma TV's, ipads, even a weeks all expenses paid heli skiing trip if you managed hit your target.

    Now the more I think of these schemes, the more I dislike them and from a customer perspective I think its really bad news. Great incentive for a mechanic to find extra work and pretend parts need changing for sure but....for you and I not so.

    As for the two different invoices, I think thats getting close to being fraudulent.

    What are the thoughts of the collective on this one?
     
  2. DSM10000

    DSM10000 MB Enthusiast

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    Well it is fairly common practice in any area of selling to incentivise the process so possibly unrealistic to ever try to stop it but I agree that as the customer we will be the ones to lose out. I think the only way to be confident is to find a garage that you trust and base your future custom with them on how they behave toward you.

    Most of us on here have a reasonable idea of what our cars need doing to them when we ask a gaage to work on them so being vigilant, asking questions and being prepared to go elsewhere if you feel the garage is carrying out unnecessary work is all we can realistically do.

    As for two invoices, well the garage do need to make a profit and I imagine that to keep labour rates lower most will apply a mark-up on the price of spare parts plus there is a cost to the garage in time for ordering and other administration tasks.. I suppose we could just be blunt (and atypically British!) and ask the direct question as to the % charged on fitted parts over the supplied price?

    I know the cost to the garage can be significantly lower than full retail, as an example my C320 needed a new lower suspension arm and the dealer I bought it from agreed to fit it at his cost, the arm was circa £78 retail, the mechanic who ordered it told me that they had been charged £38 from the supplier with trade discount.
     
  3. SPX

    SPX MB Club Veteran

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    The two invoices trick is fraud. It will be showing the VAT aspect of the bill, so in that sense they are defrauding HRMC because the customer *thinks* they are paying one amount when in fact they are paying another.

    I know of this 'incentive' game the 'suppliers' like to play, in fact I've seen it first hand. It's a disgrace and then they wonder why they get a bad name....

    I couldn't possibly say anymore on that subject because I wouldn't like to rock the boat of the forum.
     
  4. DSM10000

    DSM10000 MB Enthusiast

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    Good point re VAT, I had not considered that aspect.:thumb:
     
  5. markjay

    markjay MB Club Veteran

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    The two invoices is indeed fraud... but this stems from a perfectly legal practice that used to be quite common in many market sectors, where manufacturer's or distributor's catalogues carried 'imaginary' RRPs, and the the Trade discount was massive e.g. 50%. The reseller would then show the customer the catalogue and apply a very 'generous' discount to the catalogue's 'official' sale price, and the customer was certain he/she were getting a fantastic deal.

    The Internet sort of killed this off, as customers now have instant access to pricing and can easily distinguish between real prices and inflated ones.

    But before the Internet... unless you spent some time with the Yellow pages and then phoned around there was no way you could know if the price of say parts or tyres that you were being asked to pay at a shop or garage was reasonable or not.
     
  6. st13phil

    st13phil MB Enthusiast

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    Why?

    The end customer pays the person doing the work for the total cost of the job, which (if the place is VAT registered) will show the correct VAT. The place doing the work can claim back the input VAT based upon the invoice that they paid the parts supplier against. Where's the fraud?
     
  7. jaymanek

    jaymanek Authorised Forum Sponsor Authorised Forum Sponsor

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    the discount a garage receives is a function of the business it gives them.. for example we spend thousands with euros so we are a "super trade" customer.
    The saving we make from this is our benefit. The customer will still pay less than the price they would pay by walking in the store... whats the problem?
    If we order from our other suppliers the same item will normally cost more and this would simply be bad business - whether or not the customer gets the saving..

    I dont think many garages will go changing unnecessary items for a toaster...

    for the thousands i spend with euros ive had a cup, a few pens, a few umbrellas.... i think thats about all..

    most busy garages just dont have the time to spend their time wasting customers money unless they are really very quiet... repeat business is much much more valuable to any garage owner.
     
    Last edited: Sep 17, 2011
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  8. oldcro

    oldcro MB Enthusiast

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    An example of when the greed level goes up the honesty level falls. Showing the customer a false invoice indicating what the part cost them, then adding their profit margin and hourly rate shows a total lack of honesty and is morally wrong.
     
  9. Dieselman

    Dieselman Banned

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    As Jay says, the garage is being given a volume discount from the normal selling price and I can't see why they would pass this on.
    Surely buying an item at one price and selling it at another is how businesses make profit.
     
  10. SPX

    SPX MB Club Veteran

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    If you are showing a receipt that you've 'paid' £100+VAT for a part and instead it was really £60+VAT and you go to claim your VAT back on the £100, there is the fraud.

    I also can't see the problem in using your discount for parts as a trader, I just don't see why you would mis-lead someone into thinking they'd paid more for their parts than they really had?
     
  11. Dieselman

    Dieselman Banned

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    I can't see how the supplier is supposed to be providing two separate VAT invoices for the same part, that is either direct fraud but would also mean the business is showing greater turnover than it is, so they would be liable for more tax.
     
  12. OP
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    Sp!ke

    Sp!ke Administrator

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    i dont think the customer copy shows VAT but i might be wrong.

    As for the prizes, were not talking toasters here. My mate has won everything I said in my post...not because he rips people off but because he's so damn busy and therefore spends a fortune on parts. I do know however that in order to hit close targets he does sometimes buy a whole load of extra consumables that he doesnt really need. My 60L barrel of concentrated screenwash is one such example that he bought and then promptly gave away just to hit a quarterly target.

    It just struck me that if a garage was close to winning a 50” plasma and time was running out then in many cases the likelihood of having a higher parts bill should you unwittingly bring your car for a service during this time period would seem rather probable.
     
    Last edited: Sep 17, 2011
  13. nick mercedes

    nick mercedes MB Enthusiast

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    A bit like my example from yesterday of a national "discount" parts chain wanting £197 for exactly the same part that can be brought for £79?
     
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  14. nick mercedes

    nick mercedes MB Enthusiast

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    Garages are expected to make money on the parts that they fit.
     
  15. OP
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    Sp!ke

    Sp!ke Administrator

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    They make money on the labour for fitting the part.

    Whats to stop the customer supplying their own parts?
     
  16. Dieselman

    Dieselman Banned

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    A garage makes money on the whole job, which is what they quote for. It's up to them what they charge for the part element.

    Some garages do allow part supply, but I doubt the garage would be happy to honour any warranty.
     
  17. nick mercedes

    nick mercedes MB Enthusiast

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    Any business will make money at every stage.

    Hense if you get a plumber round to do some work he'll stick a bit on the trade price he paid for his plumbing supplies.
     
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  18. nick mercedes

    nick mercedes MB Enthusiast

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    Turning up with your own parts is a bit like showing up to a resturant with your own bottle of wine.
     
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  19. Dieselman

    Dieselman Banned

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    Do MB dealers not charge more for the parts they fit than they pay for them?
     
  20. golden1245

    golden1245 Active Member

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    It's not too hard to find most parts online, which also extend the discount to customers, all you'd have to pay is for labor if you don't know how to install it yourself. It always helps to be a little bit tech savvy or mechanically inclined when dealing with repair shops. But hey, everyone needs to make money somehow, no matter what profession. Physicians recommend extraneous tests and exams that are pointless, mechanics recommend fixing things that don't need to be fixed yet.
     

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