17 April 2018
One of the most overlooked aspects of the warranty parts law is the dealer’s right to request a parts reimbursement rate increase annually. Most state laws permit a dealer to submit for a rate increase once per
On average, the dealers that prepare a second or even third submission, increase their
most striking observation has been the drastic difference between the average markup charged by dealerships to their retail customers for parts. Some dealers have been approved at over a 100{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} mark up while other dealers have been approved below 60{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c}. The main reasons for such discrepancies directly relate to the parts matrix in place and discounts. Oftentimes, parts departments do not implement an aggressive enough parts matrix to maximize their profitability. Other times, the matrix is effective; however, discounts are utilized too liberally, reducing the rate and profitability.
Please see the table below which shows a list of the average approved markup rates by franchise:
General Motors | 81{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Ford | 70{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Chrysler | 77{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Honda | 78{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Nissan | 69{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Hyundai | 74{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Subaru | 75{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Luxury Franchises | 89{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
Other Franchises | 76{dbc2a7977897ed6bb279211f092ba1f542e4cbaf62b292c7a918387c014c548c} |
As you can see, the average approved rate for most franchises is in the mid to upper 70’s, with the luxury brands much higher.
It makes sense for dealerships that were approved at or below the average to analyze both its parts matrix and its discounting practices. We can assist you with this.
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