Successful Parts Sourcing for Diesel Repair Shops

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Successful Parts Sourcing for Diesel Repair Shops

In the 80’s and 90’s, competition with OEM dealerships like Ford, Chevrolet/GM, and Dodge/Chrysler was a completely different ball game. Often times, dealers were charging a hefty markup on parts and a labor rate that the independent aftermarket (IAM) could compete with. The OEM dealers have realized what they are leaving on the table with the Ford 6.0L hay day as well as all of the work/customers leaving the dealers once the warranty period was up on the car/truck. Since making this realization, dealerships have improved their pricing structures to become more competitive with the IAM.

All business owners know how difficult it can be to balance profitability with a price point that is palatable to the customer. We can’t afford to chop labor rates to bring pricing down. With a decrease in qualified technicians entering the market and an increase in qualified baby boomers leaving the tech market, demand is increasing for qualified technicians as the number continues to decrease. This means the hourly wage of technicians has increased which, of course, leads to more overhead. Cutting labor rates to be competitive in today’s market place is a tough option.

What’s left? Parts. Where we source our parts can have a big impact on our cost of goods sold (COGS), and thus an equally big impact on our bottom line. Here are three things Diesel auto and truck shops can do to become more profitable:

  1. If possible and time allows, have components rebuilt – Many times, a rebuilt fuel injection pump, turbocharger, starter, alternator, or injector can be rebuilt at a significantly reduced cost from new. A qualified diesel rebuilding shop can restore these components to “like new” quality with a similar warranty at a reduced cost. This will save money for the customer and the diesel truck or car repair shop.
  2. Purchase parts through an authorized distribution center – For the majority of components on Diesel engines, the vehicle manufacturer is sourcing from a components manufacturer like Bosch, Stanadyne, BorgWarner, Denso, Delphi, Garrett, Holset, etc. These components are marked up by dealers and then sold to the IAM. Calling your local authorized service center and distributor will allow you to buy directly from a manufacturer distributor and can save your hard earns dollars on things like Injectors, pumps, turbochargers, o-ring and gasket kits, IPR valves, ICP sensor, etc. Many times, these are the exact same OE parts as you would purchase from Ford, Dodge/Cummins, GM, CAT, etc.
  3. Be sure to check the vehicle manufacturers sale price against the price directly from the distributor – Since the components are very similar or the same for many pumps, injectors, and turbochargers, IAM diesel repair shops can mark parts up to match the OEM list or even at a discount from list while still making a decent profit to cover overhead. This shares some of the cost saving with the consumer which is a win-win for both the customer and the repair shop.

Hopefully, this will help business owners in becoming more profitable shops. Consistent profitability leads to growth and continued success.

If you would like special pricing on the many brands Diesel Pro offers, fill out the contact form under the contact information tab, and we can get your business special price lists and/or set your repair shop up as a dealer for one of the brands we offer.

 

 

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