Re: Catering to used car buyers-parts

[Linus Toy <linust@mindspring.com>]

>From: Fringe Ryder <fringe@fringeweb.com>
>
>Not necessarily.  The U.S. stock market has returned over 11% over the last
>90 years, on AVERAGE.  1990s European inflation has been much higher.  For
>sake of avoiding debates, we'll go with the very conservative 11% number.
>
>Many of the cars on this list are more than a decade old (which means
>1987).  In one decade, an unused part will almost triple in cost due to
>that 11% inflation. (It will go up to 284%.)  The 15-yr old urQs will
>almost quintuple!

i agree with your numbers, but this is a bit simplistic a model for spare
parts pricing.  to start with, it assumes that spare parts made for that
specific model year cannot be used on any other model year's products.
(exactly what the model looks like, i don't know)

while that may be true for my '91 200q 20v in the USA, the general reality
is that the Audi I-5 enjoyed an over 15 year production run.  although much
changed over the years, there was a commonality amongst many parts

>On top of that, Audi doesn't -know- how many parts to produce.  You're
>asking them to take a very expensive gamble, take a lot of money out of
>capital, and lose the earning benefits of it to provide for a potential
>market that may not materialize.  If demand goes over, you want them to
>restart the line - which is no easy nor inexpensive feat!

I would think that auto manufacturers DO know how many parts to produce as
spares, but given the low sales volume levels in the US, the statistical
averages don't quite fit the models too well.  plus, this ignores two
phenomena in the manufacturing industries:  first, companies do rationalize
their product lines where possible, to extend the life of their design and
engineering investment;  thus, it is in their interest to extend the use of
a part--this is really another way of stating my note above about common
parts across a product's designed life time. (yes, i am aware of the second
desire to make small changes to frustrate alternative suppliers--its a
balancing act)  a second incentive for manufacturers to keep a production
line open to the same design and spec is the cost-volume curve.  this
simply is the phenomena where the more units of a widget a company
produces, the less and less it costs to produce each widget.  you can
debate the merits of whether this is adjusted for inflation or not, but the
simpler way to look at it is the labor content (hours) for complex
products:  it has been said that Boeing uses 50% of the labor content to
build a 747 today compared to the first 747 of fthe assembly line in the
60s.  

As i said earlier, i don't know what the pricing model really looks like,
but there are many more factors than we've examined here--packaging,
testing, distribution, etc.  obviously its much less expensive to
distribute whole assemblies as opposed to small parts--i guess the whole
car is the epitome of whole assembly, at some 5% the combined cost of the
individual parts !

>Audi parts may be out of line, but it may actually be CHEAPER for a shop
>set up to do small quantities of parts now to produce them than for you to
>buy an inflation-adjusted part that was produced when your car was.

As an aside on parts pricing (and to rspnd to another thread), we recently
had the timing belt replaced on the Honda (the backup, till we sell it) and
the Volvo (hers).  The independent mechanic charged 2 hrs labor plus $70
for the belt on the Honda.  The _dealer_ charged the same 2 hrs labor (same
rate, too) but only  $25 for the belt on the Volvo.  I shudder to think
about what I should set aside for the quattro --due within 15k miles :(
--Linus
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* linus toy                       email:  linust@mindspring.com      *
* mercer island, wa                                                  *
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