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Thread: Discount BMW Parts - from a BMW Dealer

  1. #46
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    Quote Originally Posted by 36654 View Post
    Each of those corporations have been replaced by others (Kmart...to...Walmart...to.....Amazon) that have managed to reduce distribution and manpower costs while providing the selection desired by the market.

    Relative to motorcycles not being mass marketed...........Many dealerships can move the bulk of their inventory without ever selling to a customer, but by selling to other dealerships. That goes for cars and motorcycles. In addition, MC internet sales, especially of left-over stock, is booming. Ebay has a number of dealerships that will even allow you to do the auction experience.
    Valid points all of them but there are other issues involved as well. Yes, dealers can move units to another dealer either through floor plan transfers or out and out buy's. As a general rule those transactions are producing zero revenue, or in my experience anyway zero to meaningless revenue. On the bright side it is a valuable tool in order to stem losses. Certainty valuable in its own right.

    Floor planning costs eat up dealers alive. Floor planning costs are a serious issue particularly within the motorcycle industry although they certainly exist in the car industry as well. When your local car dealer is running a 100 million dollar floor plan you can bet that dealer has substantial means behind him/her. More than likely they already have the funds in their possession to buy that Porsche and go racing.

    Car stores are far, far better at getting rid of unwanted unit inventory than motorcycle dealers. The infrastructure within the automotive market to move product is phenomenal. Far from phenomenal in the motorcycle market. Although there are certainly bright spots in the motorcycle industry overall the motorcycle market has been hurt badly since the crash of the economy. We've witnessed who knows how many folks close the doors. Some to the economy and some due to poor business operations. Unit inventory sales over the internet have increased and maybe some would say it's booming. But if the total units nationwide is struggling you have merely swapped the mode of end user delivery. Usually accompanied by a downward price pressure. Now before people start writing in reference to my price comment I am not trying to complain about the price. The benefit may be solely to stem floor plan losses. Not the best way to stay in business but again valuable in its own right.

    Despite some negatives I love this business even after 30 years and not many folks get to say that. Things are looking better around the country so I am happy for that. I consider myself blessed indeed.

    By the way, motorcycles are still not a mass market in the United States as they remain firmly in the niche category when compared to automobiles.

  2. #47
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    Quote Originally Posted by 36654 View Post
    Each of those corporations have been replaced by others (Kmart...to...Walmart...to.....Amazon) that have managed to reduce distribution and manpower costs while providing the selection desired by the market.

    ...............
    I beg of you... please don't send me to any of the above to work despite all the good they do for mankind.

  3. #48
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    Quote Originally Posted by billy walker View Post
    I beg of you... please don't send me to any of the above to work despite all the good they do for mankind.
    They are just reducing costs to bring the lowest priced goods to the public. Accordingly, everything between the owner and the customer has to be done at the lowest price that can be achieved. See, capitalism has no interest in the community, just the efficiency of the transaction.

    I think it was J.J. Newberry that said there were no careers in retail except for the owner. Daniel J. Boorstin has a great section on the American retailers in one of his books. Unfortunately, I can't recall which one at this time.
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    And there has never been a more successful method of producing goods and services than Capitalism. More and better products for everyone. Just get a job and shut up.
    Marty - in the western Oregon mountains.'06RT, (gone '04RT, '86 Venture Royal, '81 Yamaha Virago920, '82Suzuki GS1100GK, '76 Suzuki GT750, Triumph 750 Bonneville, BSA Road Rocket 650, 61" Harley knucklehead)

  5. #50
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    Quote Originally Posted by 36654 View Post
    They are just reducing costs to bring the lowest priced goods to the public. Accordingly, everything between the owner and the customer has to be done at the lowest price that can be achieved. See, capitalism has no interest in the community, just the efficiency of the transaction.
    Irresponsible capitalism perhaps. You always have moral responsibilities to all parties involved. Not everything is about nailing down the last dollar to be put into your pocket.

    Quote Originally Posted by 36654 View Post
    I think it was J.J. Newberry that said there were no careers in retail except for the owner. Daniel J. Boorstin has a great section on the American retailers in one of his books. Unfortunately, I can't recall which one at this time.
    I guess I've wasted 30 years of my life in retail then.

  6. #51
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    Quote Originally Posted by MPMARTY View Post
    And there has never been a more successful method of producing goods and services than Capitalism. More and better products for everyone. Just get a job and shut up.
    Valid point. But who said they were looking for a job?

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    Quote Originally Posted by osbornk View Post
    When I lived in Lynchburg, Va., I shopped at Hammersley and I ordered parts from them after I moved away. They were small dealership in the back of a BMW, Mercedes, etc. dealership. Since they were a small dealership in a small community, I think they survived by selling parts at a discount throughout the country. They made less profit on the parts they sold at a discount but it was profit and sales they would not have had if they had only sold at MSRP.

    Selling parts is no different than selling anything else. Your business model can be selling fewer goods at a higher profit per unit or selling more goods at a lower profit per unit. As we learned in Econ. 101, the law of diminishing returns is a delicate balance.
    Using the above economics of selling to a plan that made money for a dealer, I used to buy Toyota crash parts from a Toyota dealer in Texas,pay shipping to KY & save money based on their discounting. I recall hearing that they had 18 wheelers hauling in there frequently to resupply a booming parts business. It lasted a few years then I was told that the larger discounts were gone due to the mfg. having told them to stop. Obvious that other dealers had told them it was hurting their business plan of higher markups. The adage "all good things must end" comes to mind.
    "If I had my life to live over, I'd dare to make more mistakes next time...I'd relax,I'd limber up... I would take fewer things seriously...take more chances... take more trips...climb more mountains...swim more rivers...eat more ice cream." Jorge Luis Borges at age 85.

  8. #53
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    Quote Originally Posted by 36654 View Post
    In my experience, customer relations are largely a function of the corporation/national distributor policies. I've seen this with several multi-line car dealerships where the customer service varied wildly based on the brand. IMHO, some companies (Toyota & Honda, in my experience) enforce a level of customer service to insure brand satisfaction while the "Big Three & others" operated on the basis of "screw you, you'll get what we give you".

    I like the idea of dealing local, but it's challenging to find those sources.
    I find it hard to buy into your concept when many dealerships across brands are owned by the same person. I get it that the mfg has their finger in the operation but still not the driving force in play? As for dealing local, when you live in the boonies that simply doesn't happen with only a few retail exceptions available. A few days ago I called a light fixture seller in CA that sold me lights made in China that were shipped from the MS warehouse. Thats how its done these days and even a "local" seller its often not in stock anymore no matter what it is.
    Are the BMW car dealerships that are discounting parts online at risk from BMWNA? Whats the risk (if any) for a BMW MC dealer that does online parts discounting to raise volume?
    "If I had my life to live over, I'd dare to make more mistakes next time...I'd relax,I'd limber up... I would take fewer things seriously...take more chances... take more trips...climb more mountains...swim more rivers...eat more ice cream." Jorge Luis Borges at age 85.

  9. #54
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    Quote Originally Posted by billy walker View Post
    Irresponsible capitalism perhaps. You always have moral responsibilities to all parties involved. Not everything is about nailing down the last dollar to be put into your pocket.



    I guess I've wasted 30 years of my life in retail then.
    1) Capitalism is capitalism, an economic system......not a form of government or a social contract....Adam Smith addressed that in his writings. In the North America & northern Europe we have Capitalistic economies and representative forms of government. In many desperately poor and corrupt nations (Haiti, Pakistan, much of Africa) they have brutally efficient free market capitalism with corrupt governments.

    2) I don't mean to be personally critical but, as we have seen with Walmart and Amazon, deleting all manpower expense between the point of production and the consumer has been a primary means of increasing profitability in retail for the past several decades. Just be lucky you weren't in the production side of the equation, those folks saw the train pass by in the 1980's. In many of those cases, executive level staff was handsomely rewarded for the bold "courage" to eliminate lower level staff.

    3) I was raised in the outskirts of the Rustbelt..............."Everybody gets a turn at being on the short end of the stick......"
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  10. #55
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    Quote Originally Posted by kantuckid View Post
    I find it hard to buy into your concept when many dealerships across brands are owned by the same person. I get it that the mfg has their finger in the operation but still not the driving force in play? As for dealing local, when you live in the boonies that simply doesn't happen with only a few retail exceptions available. A few days ago I called a light fixture seller in CA that sold me lights made in China that were shipped from the MS warehouse. Thats how its done these days and even a "local" seller its often not in stock anymore no matter what it is.
    Are the BMW car dealerships that are discounting parts online at risk from BMWNA? Whats the risk (if any) for a BMW MC dealer that does online parts discounting to raise volume?
    The "risk" is in the dealer's interpretation of his franchise contract with BMW NA. The franchise contract applies to and is likely priced based on the size and wealth (income level) of the franchise territory. From one perspective, the dealer offering the discount is taking income from the territory that another dealer paid for. Accordingly, dealers will likely pressure the distributor to enforce the territory rules of their franchise contracts.

    I've seen this happen recently in cars, back in 2010, my wife shopped for her car via the internet, getting price quotes within a 150-mile radius. The pricing service was offered thru Consumer Reports and looked similar to PriceShopper.com. In-stock inventory was identified and dealers responded with prices including trade-in offers based on "blue book" wholesale (auction) values for your old vehicle. Today, I recently replaced my old pick-up and tried the on-line approach...............but no dealer would offer a price on line or on the phone....only face to face. Ultimately, it was the same deal, invoice price, minus whatever incentive (in my case, college graduate many decades ago) and wholesale book value for whatever trade. But, this time, I had to drive the big loop to get the prices instead of using the web. It's just more hassle, but protects dealers that don't want to compete with other dealers.
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  11. #56
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    Quote Originally Posted by kantuckid View Post
    I find it hard to buy into your concept when many dealerships across brands are owned by the same person. I get it that the mfg has their finger in the operation but still not the driving force in play? As for dealing local, when you live in the boonies that simply doesn't happen with only a few retail exceptions available. A few days ago I called a light fixture seller in CA that sold me lights made in China that were shipped from the MS warehouse. Thats how its done these days and even a "local" seller its often not in stock anymore no matter what it is.
    Are the BMW car dealerships that are discounting parts online at risk from BMWNA? Whats the risk (if any) for a BMW MC dealer that does online parts discounting to raise volume?
    I don't know if NA has a MAPS policy or not.

    If a MAPS does not exist the risk can be kept to an acceptable level assuming you have good people in place. You would assume some relatively minor additional costs if you head this direction in a logical manner. Real estate (i.e. shelf space) may become an issue without altering the store or possibly acquiring more space for this end of the business which could mean more warehouse space which would up the risk. But if that increase is going to have the potential to be a show stopper why get involved in the first place. Stick to your local market.

    If the dealer is going to order the vast majority of items ordered by the customer this effectively eliminates one of the dealers larger risks with inventory control. However, this is done at the expense of the customer because now the customer needs to wait for the dealer order to arrive at the dealer and then it gets shipped to the customer. Quite a few stores operate in this manner so I guess most customers are ok with the wait. Although some aftermarket companies may do drop ships I am not aware of drop ships being done on a large scale by the OEM. Maybe someone involved in the industry can add to this statement?

    Last but not least if you do add to your inventory if nothing else you would have possible additional insurance costs. Obviously you have packaging costs involved and a few other things. There is also the question of how you're going to handle local over the counter business. Are those sales being discounted as well or is it strictly an internet thing? In the end minus a MAPS policy IMO there is minimal risk in getting a discount online operation up and running. BMW is ultimately a niche player. A discount operation needs to have its act together to turn into anything really worthwhile especially when there are others already involved. For someone with the appropriate skill sets I say go for it!

  12. #57
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    Quote Originally Posted by 36654 View Post
    1) Capitalism is capitalism, an economic system......not a form of government or a social contract....Adam Smith addressed that in his writings. In the North America & northern Europe we have Capitalistic economies and representative forms of government. In many desperately poor and corrupt nations (Haiti, Pakistan, much of Africa) they have brutally efficient free market capitalism with corrupt governments.

    2) I don't mean to be personally critical but, as we have seen with Walmart and Amazon, deleting all manpower expense between the point of production and the consumer has been a primary means of increasing profitability in retail for the past several decades. Just be lucky you weren't in the production side of the equation, those folks saw the train pass by in the 1980's. In many of those cases, executive level staff was handsomely rewarded for the bold "courage" to eliminate lower level staff.

    3) I was raised in the outskirts of the Rustbelt..............."Everybody gets a turn at being on the short end of the stick......"
    You're entitled to your opinion. As for me I'll continue to stick to what I feel is responsible capitalism irregardless of what Mr. Smith states. Under your scenario if you can get to the point of eliminating let's say half of the jobs in America you've done an incredible job. You obviously have the right to feel that way. I call it insanity.

  13. #58
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    Quote Originally Posted by 36654 View Post
    The "risk" is in the dealer's interpretation of his franchise contract with BMW NA. The franchise contract applies to and is likely priced based on the size and wealth (income level) of the franchise territory. From one perspective, the dealer offering the discount is taking income from the territory that another dealer paid for. Accordingly, dealers will likely pressure the distributor to enforce the territory rules of their franchise contracts.

    I've seen this happen recently in cars, back in 2010, my wife shopped for her car via the internet, getting price quotes within a 150-mile radius. The pricing service was offered thru Consumer Reports and looked similar to PriceShopper.com. In-stock inventory was identified and dealers responded with prices including trade-in offers based on "blue book" wholesale (auction) values for your old vehicle. Today, I recently replaced my old pick-up and tried the on-line approach...............but no dealer would offer a price on line or on the phone....only face to face. Ultimately, it was the same deal, invoice price, minus whatever incentive (in my case, college graduate many decades ago) and wholesale book value for whatever trade. But, this time, I had to drive the big loop to get the prices instead of using the web. It's just more hassle, but protects dealers that don't want to compete with other dealers.
    There is another factor involved that few are aware of. There is something in the vehicle business called the "absorption rate". What that means is how much from a percentage point of view can the back end (service, parts, accessories) cover for the operating costs of the ENTIRE business. In other words if you have a monthly overhead of say $100,000 per month. Can your back end generate enough profit to pay that $100,000 nut in full? If so, you have a 100% absorption rate. If so, you have more leeway on vehicle pricing than the guy who either isn't good enough to do so or lacks the market place to do so or possibly both. A dealer that can move thousands of cars thru the front end is in effect driving business for the rest of the store. In a competitive marketplace 100% absorption is considered an extremely worthwhile goal. But like most things in life few people are good enough to achieve this goal although it certainly exists in the car business for those good enough to pull it off.

    I have never heard of a motorcycle dealer achieving 100% absorption. Maybe someone has and I'm just not aware of it. In the motorcycle market you need to have a 12-month overall reasonable margin on your unit sales or you will be out of business. The rest of the store cannot cover all of the overhead in today's dealerships. On top of that many if not most service departments in the motorcycle industry lose money. I realize that is extremely difficult for customers to understand. Hourly labor rates are pretty substantial in most places anymore. But the truth remains. That loss however falls at the feet of dealer management most of the time. The last 4 or 5 years have been particularly difficult and even some good dealers have been swept away. Someone on this forum was busy blaming customers for "stealing" dealer profits. That is pure stupidity. The dealer needs to "man up" and learn how to run his/her own business.

    Anyway, the end result is the dealer needs to know how to be profitable with the remaining departments in the store if he/she has any hope of surviving and growing. Such is life.

  14. #59
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    Quote Originally Posted by billy walker View Post
    I call it insanity.
    You, I and Mr. Smith are all in agreement on that issue. The market has no morality, it's just a mechanism that seeks the greatest efficiency within the bounds of it's environment.
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    I'm not going to tackle the capitalism, or morals issue. I'm still not sure about motor oil!!!!

    Do the local clubs get a discount?

    E.

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