Pasted Graphic

First reported by info@Crashnetwork.com 8/17/15

Impacts of Parts Price-Matching

General Motors says the pilot testing of its MyPriceLink system in the Denver market, which began July 22, took another step forward last week with the automaker now making adjustments to parts pricing in the system. MyPriceLink, which GM still plans to roll-out nationwide in the fourth quarter of this year, is designed to give the automaker more flexibility in providing a competitive parts price upfront during the estimating process rather than just after-the-fact price-matching through its "Bump the Competition" program. Although such price-matching programs are designed to help automakers compete with non-OEM parts, they also have had the effect of lowering the OEMs' percentage of the total parts dollars on estimates, according to Greg Horn of Mitchell International. Mitchell data shows new OEM parts accounted for 65.1 percent of total dollars spent on parts in the first quarter of 2015. That has drifted downward from 68 percent in 2010 and about 74 percent in 2007. But Horn points out that some of that apparent decline is actually the result of OEM parts pricing being lowered to match alternative parts. For example, if an estimate includes one $700 new OEM part and $300 in alternative parts, the OEM percentage of total dollars is 70 percent ($700/$1,000). But if the automaker discounted that part to $625 to match a competing non-OEM part price, the total parts dollars on the estimate drops to $925 of which only 67.5 percent is accounted for by the same one OEM part ($625/$925). As CRASH Network has pointed out, this also results in fewer parts profit dollars for shops.

© Diamond Standard Parts, LLC