Should garages make money on parts?

[grober]

All businesses have overheads to cover and profits to make----- but the same applies to ford vauxhall toyota etc who have the self same organisational costs- so how come their stuff /labour rates are cheaper----there's making a decent margin/profit and there's taking the piss

 

[Tuercas viejas]

All businesses have overheads to cover and profits to make----- but the same applies to ford vauxhall toyota etc who have the self same organisational costs- so how come their stuff /labour rates are cheaper----there's making a decent margin/profit and there's taking the piss

In short
Because THEY are the originators of the product or sub item component in question
, Either made in house, or a bought in by huge bulk buying sub contracting activities for a fixed price over a supply period by a major volume worldwide component supplier (s).
Multi nationals like TRW & AP come to mind.
Tuercas Viejas

 

[markjay]

All businesses have overheads to cover and profits to make----- but the same applies to ford vauxhall toyota etc who have the self same organisational costs- so how come their stuff /labour rates are cheaper----there's making a decent margin/profit and there's taking the piss

You can get a cup of coffee in London for anything from £1.50 to £3.50. Is the £3.50 coffee better? Probably. Do these shops have higher costs (more staff, higher rent due to location)? Absolutely. Do these in themselves justify the higher price? Unlikely. Some businesses make more profit than others. It's a free country and consumers can vote with their feet.

For me, charging the moon isn't a rip off as long as the charge is clearly explained in advance, and there's an alternative.

 

[Tuercas viejas]

Ah with your above example its all about the overheads.
In short the cost of doing business & ROI from business investment .

My business overheard maybe "quote different" when comparing myself with say a similar shop in West Virginia as it would be in London . Things like Corporation tax. Income tax, Local Tax City taxes, insurance, direct labor costs, property rents or business mortgages, enviro' direct costs all add up to an overhead that determines charge out rate & profit margins.
Tuercas viejas

 

[grober]

You can get a cup of coffee in London for anything from £1.50 to £3.50. Is the £3.50 coffee better? Probably. Do these shops have higher costs (more staff, higher rent due to location)? Absolutely. Do these in themselves justify the higher price? Unlikely. Some businesses make more profit than others. It's a free country and consumers can vote with their feet.

For me, charging the moon isn't a rip off as long as the charge is clearly explained in advance, and there's an alternative.

I think its called marketing--- a widely used mind manipulating technique to convince people that the product or service they buy is worth far more than it actually is --- its a free country as you say but that freedom increasingly appears to encompass the freedom for business to lie thro their teeth to the consumer whose rights I might add are poorly protected in the UK by a series of legislatively toothless government quangos

 

[markjay]

I think its called marketing--- a widely used mind manipulating technique to convince people that the product or service they buy is worth far more than it actually is --- its a free country as you say but that freedom increasingly appears to encompass the freedom for business to lie thro their teeth to the consumer whose rights I might add are poorly protected in the UK by a series of legislatively toothless government quangos

For lying businesses, we have a range of measures and institutions, including the ASA, the Consumer Rights Act 2015, Trading Standards, small claims court, etc.

In addition we have Non-government measures at our disposal including things such as Facebook, Trustpilot, Google reviews, as well as Which? magazine and Citizens Advice bureaus.

 

[grober]

For lying businesses, we have a range of measures and institutions, including the ASA, the Consumer Rights Act 2015, Trading Standards, small claims court, etc.

In addition we have Non-government measures at our disposal including things such as Facebook, Trustpilot, Google reviews, as well as Which? magazine and Citizens Advice bureaus.

Tell that to the leasehold flat owners in towerblocks covered in inflammable cladding?

 

[markjay]

Tell that to the leasehold flat owners in towerblocks covered in inflammable cladding?

I'm guessing that after the first round of lengthy custodial prison sentences handed-down by the courts to the directors of the companies involved in the scandal, these sort of things won't happen again. But agreed, we're not living in a perfect world.

 

[Deleted member 159894]

I think its called marketing--- a widely used mind manipulating technique to convince people that the product or service they buy is worth far more than it actually is --- its a free country as you say but that freedom increasingly appears to encompass the freedom for business to lie thro their teeth to the consumer whose rights I might add are poorly protected in the UK by a series of legislatively toothless government quangos

Every cloud eh?

 

[grober]

In short
Because THEY are the originators of the product or sub item component in question
, Either made in house, or a bought in by huge bulk buying sub contracting activities for a fixed price over a supply period by a major volume worldwide component supplier (s).
Multi nationals like TRW & AP come to mind.
Tuercas Viejas

I take your point about economies of scale and mass production- guess we are all familiar with the HENRY FORD model of manufacture compared to the previous hand built cars and the stark contrast in manufacturing technique dropping the purchase price. However most mass market manufacturers now fall within the same investment envelope curve Putting it in other words the relative unit costs of producing 100 shock absorbers is much higher than producing 100,000 when you take into account tooling up a production line---that said I suspect the cost curve of producing 1,000,000 doesn't change unit production cost much over 100,000. The trick is to convince people that their product is on a different part of the unit production cost curve than it actually is to justify the increased purchase price.

 

[grober]

Every cloud eh?

I guess the phrase "will go up like a Roman Candle in the event of fire" didn't figure in the glossy brochure.

 

[Tuercas viejas]

I take your point about economies of scale and mass production- guess we are all familiar with the HENRY FORD model of manufacture compared to the previous hand built cars and the stark contrast in manufacturing technique dropping the purchase price. However most mass market manufacturers now fall within the same investment envelope curve Putting it in other words the relative unit costs of producing 100 shock absorbers is much higher than producing 100,000 when you take into account tooling up a production line---that said I suspect the cost curve of producing 1,000,000 doesn't change unit production cost much over 100,000. The trick is to convince people that their product is on a different part of the unit production cost curve than it actually is to justify the increased purchase price.

In a general sense you are right, the real issue boiled down is in house manufacture versus out sourced through a multi national suppliers like TRW who I cited previously.
As long as the original blacksmithing manufacturer of say valve springs can "enjoy" a fixed price over the contract period then all is well contractually on almost all fronts
.
We don't however live in a perfect world, and a fixed price for a unit run can potentially cause serious financial difficulties for the original supplier, notably the original Rubbermaid brand and Walmart comes to mind.

But staying with "motors" for the minute a let's say TRW contracts with a popular UK fictitious car brand called The Boccarini Super Sports Cars Company of Podunct Town UK.
The original spec is solid drawn Swedish alloy wire for valve springs.
TRW contracts with British Steel to source the raw material i.e. the right specified wire from Sweden for a fixed price .
The price of specialty steels suddenly rises and the Swedish cannot supply for that price so they claim Force Majeur circumstances in the contract.

TRW now looks to source elsewhere due to their contractual obligations with Boccarini and finds a Polish company that can supply an equivalent for a much lower price securing profit margins.
The Polish company has in fact signed a secret deal with a Russian steel maker who actually supplies the material through the Polish company as a pass through activity..

Suffice to state the valve springe go "soft in service and engines are blowing up all over the place almost bankrupting poor old Boccarini in the process of warranty claims and lost customer confidence.
Sound familiar?
It should do, it happens every day with out sourcing.
Tuercas viejas ,.

 

[Tuercas viejas]

OK the issue now is who is going to litigate for malfeasance and financial relief against a series of multi national actors as defendants and companies domiciled outside the UK?
Tuercas Viejas

 

[Deleted member 159894]

I guess the phrase "will go up like a Roman Candle in the event of fire" didn't figure in the glossy brochure.

No idea.

 

[Deleted member 159894]

OK the issue now is who is going to litigate for malfeasance and financial relief against a series of multi national actors as defendants and companies domiciled outside the UK?
Tuercas Viejas

Even less idea

 

[Bellow]

In a general sense you are right, the real issue boiled down is in house manufacture versus out sourced through a multi national suppliers like TRW who I cited previously.
As long as the original blacksmithing manufacturer of say valve springs can "enjoy" a fixed price over the contract period then all is well contractually on almost all fronts
.
We don't however live in a perfect world, and a fixed price for a unit run can potentially cause serious financial difficulties for the original supplier, notably the original Rubbermaid brand and Walmart comes to mind.

But staying with "motors" for the minute a let's say TRW contracts with a popular UK fictitious car brand called The Boccarini Super Sports Cars Company of Podunct Town UK.
The original spec is solid drawn Swedish alloy wire for valve springs.
TRW contracts with British Steel to source the raw material i.e. the right specified wire from Sweden for a fixed price .
The price of specialty steels suddenly rises and the Swedish cannot supply for that price so they claim Force Majeur circumstances in the contract.

TRW now looks to source elsewhere due to their contractual obligations with Boccarini and finds a Polish company that can supply an equivalent for a much lower price securing profit margins.
The Polish company has in fact signed a secret deal with a Russian steel maker who actually supplies the material through the Polish company as a pass through activity..

Suffice to state the valve springe go "soft in service and engines are blowing up all over the place almost bankrupting poor old Boccarini in the process of warranty claims and lost customer confidence.
Sound familiar?
It should do, it happens every day with out sourcing.
Tuercas viejas ,.

Then the re-sourced steel isn't an equivalent and therefore not to the spec TRW are contracted to supply.

 

[Tuercas viejas]

Then the re-sourced steel isn't an equivalent and therefore not to the spec TRW are contracted to supply.

Exactly breach of contract, possibly under terms and conditions clauses but by whom?
Tuercas viejas

 

[Tuercas viejas]

No idea.

The UK legal entitles.
Surprising some of the best around but knobbled these days by Brexit and access to international firms & Legal Euro system barriers
T'was up to recently a great revenue earner for British Invisibles.
Tuercas viejas

 

[Bellow]

Exactly breach of contract, possibly under terms and conditions clauses but by whom?
Tuercas viejas

TRW.

TRW contracts with a popular UK fictitious car brand called The Boccarini Super Sports Cars Company of Podunct Town UK.
The original spec is solid drawn Swedish alloy wire for valve springs.
TRW contracts with British Steel to source the raw material i.e. the right specified wire from Sweden for a fixed price .

 

[Tuercas viejas]

And now the legal arguments start & what was the understanding at the signing of the contract's terms and conditions of the technical terminology "Swedish alloy wire " was it a trade euphemism in small print addendums or a physical product from a Swedish wire producer ?.
Tuercas viejas
p.s This is getting like am MBA course in the law of contracts (OMG!)