Auto Parts Prices Explained
Do you know why auto parts cost more at a repair shop than they do at your local auto parts store, or why most repair shops refuse to install customer-supplied products? Without knowing the facts, vehicle owners might assume these are profiteering business practices, but in reality there are several good reasons.
Lower overhead is the key reason why auto parts store prices are less than repair shop prices. Contrary to parts stores, auto repair shops:
- employ highly-paid certified repair technicians;
- have more than $100,000 invested in advanced tools and equipment to diagnose and repair high-tech vehicles;
- purchase expensive garage liability insurance to protect customer vehicles; and
- spend 40-60 training hours per employee each year to keep them up-to-date with vehicle technical changes.
- Thus, as a result of lower overhead costs, parts stores are able to sell products at lower prices, and mostly to do-it-yourself customers.
For customers who prefer to have a professional do the work, repair facilities offer the added services and expertise to install and change parts. These auto shops depend on both labor charges and product price markups to cover their higher overhead costs and generate an operating profit. In exchange, they provide consumers added value in the form of installer expertise and warranty coverage.
THE VALUE OF PROFESSIONAL SERVICE
Auto repair shops have the expertise to diagnose car problems and the knowledge to identify and obtain the correct auto parts. Do-it-yourself consumers sometimes misdiagnose problems and purchase parts that fail to fix the issue, or do not fit the vehicle. Even when a part is correct, it may be of questionable quality or additional parts may be needed to complete the repair properly. For some vehicle problems, upgraded aftermarket parts are available that can prevent a recurrence. Also, with the purchase of many common parts such as batteries, starters, and alternators, the customer incurs “core” charges that are not refunded until the old part is returned to the store. The customer assumes the responsibility to find and purchase the correct quality parts and manage returns and refunds.
In comparison, when repair shops provide the parts, they handle all of the technical and logistical issues on behalf of their customers. The added value they provide includes the time required to identify, locate, obtain, exchange and return parts as needed until the job is completed properly. Repair shops make sure they get the right parts and any needed related components, and they use only quality parts that will provide reliable service without premature failure. They also handle the core charges and/or component exchanges no additional charge as a convenience to the customer.
THE VALUE OF A WARRANTY
An auto repair made with high-quality parts may sometimes require additional professional service down the road. That’s when it’s nice to have someone to turn to for help. Nearly all auto parts sold today come with some type of warranty for the original purchaser. When consumers buy auto parts that fail, they are responsible for removing, exchanging and reinstalling the faulty component – or paying someone else to do so.
In contrast, most parts supplied by repair facilities come with a full parts and labor warranty. A 12-month or 12,000-mile (whichever comes first) warranty is common, but some shops offer even longer coverage. Also, when shops provide the parts, they handle the entire warranty repair process at no cost to the customer. This is quite valuable as many repairs can involve several hours of labor time costing hundreds of dollars. Protection against such unexpected costs is part of the added value included in repair shop part prices.
CUSTOMER-SUPPLIED AUTO PARTS
By now, you may have figured out why most repair shops refuse to install customer-supplied parts. From a strictly business standpoint, the markup on parts provides approximately half the profit on any given repair job and a shop cannot afford to give up that income. Also, if customer-supplied parts result in a problem, the car could tie up a service bay while someone (either the shop or customer) has to track down the proper components.
A second reason why shops prefer not to install customer-supplied parts is customer satisfaction. When a part fails, the customer is responsible for obtaining a replacement and must also pay for the labor to remove and replace the faulty part. Repair shops have found that even when they inform customers who supply their own parts of this possibility, the customers still tend to get upset when it occurs, blame the repair facility, speak poorly about the shop to others and post negative online reviews.
The last reason is legal liability. If a part supplied by a customer fails and results in a crash, the installing shop could end up being party to a lawsuit. When repair shops provide the parts, their suppliers share in any responsibility and will help defend the facility. If a customer purchased the part, the supplier may decline to get involved on the facility’s behalf. While such situations are rare, they create significant difficulties when they occur.
Some shops address the customer-supplied parts situation by charging a higher labor rate on these jobs. This can help shops mitigate any loss of profit, although they still have to accept the other potential downsides. In the event of a part failure, the customer remains responsible for obtaining a replacement and, depending on the shop, the higher shop rate may or may not include a labor warranty on the repair.
You now have a better idea of the many factors that go into automobile repair part pricing. It’s understandable that simply looking at the raw numbers could lead one to think that repair shops overcharge for parts. However, taking into account the professional expertise and valuable warranty coverage that comes with a shop-supplied part, it is easier to see how a higher initial price can actually be a better value in the long run.
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The content contained in this article if for informational purposes only and is not intended to provide any professional guidance. AAA does not guarantee any particular outcome