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Halfpenny

Big price rises....

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No, I'm not talking about cars, I'm talking about the consumables we use in our workshop..

Anyone notice recent big increases in the prices of lubricants and parts? I recently took delivery of some Aisin ATF and was staggered to see about 30%+ price increase from a few months ago. My supplier says its because its sourced from Belgium and shipping/import costs have rocketed. We also use Shell lubricants and they seem to have increased by 20%+..  I'm looking for cheaper alternatives...

Another issue is parts. We sometimes ordered genuine BMW and Mercedes parts from a supplier in Germany (typically half the price of our local dealers) - usually 24 hour delivery with DPD. Now it takes three days and we are being hit with stupid additional charges - not just VAT but also a 'customs charge' and a 'collection charge' - effectively making it no longer worth doing.

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The news this morning suggests that inflation rose by 2.5% last month.  Think they should try to factor car prices into their calculation as I would say last month was an easy 10-15% across our sector in June.

I did hear of a large player local to me who is busy but selling at cost.  I guess that's the pressure of stocking loans.

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As an importer I can agree with a rise in the costs involved, it is what the country voted for in leaving the EU I guess, just got to pass it on.

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2 hours ago, CRW said:

 

I did hear of a large player local to me who is busy but selling at cost.  I guess that's the pressure of stocking loans.

Why would the car dealer with stocking not sell for profit? Dont understand?

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1 hour ago, Rory RSC said:

Why would the car dealer with stocking not sell for profit? Dont understand?

Possibly debt servicing issues? 

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1 hour ago, Rory RSC said:

Why would the car dealer with stocking not sell for profit? Dont understand?

I can only assume he is buying at these current sky high figures and can not return profits at these prices.  He will have to use his stocking loan quota or will be penalised, so its just a case of turning them over. Seems a pretty bleak scenario.  I have stopped buying at the moment as I don't have the confidence that these prices are sustainable.  Potential customers are coming off the furlough scheme, thinking about holidays etc and I think the demand will slip slightly. I simply don't want to get caught out with a forecourt of expensive stock.  However, if this isn't the case I will run with it, but I wasn't going to be the first to put my prices up.

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2 hours ago, CRW said:

but I wasn't going to be the first to put my prices up.

What? Haven’t your prices gone up this last year? Mine have!

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2 minutes ago, BHM said:

What? Haven’t your prices gone up this last year? Mine have!

Yes, to a certain extent, but if your nearest competitor is selling at "old" prices you still have to be competitive.

CDM had an article on here a few weeks back saying that the jump in trade prices isn't being fully reflected on the forecourts. You can put the prices up however high you like, but you have to find someone willing to pay them.  Customers are a savvy bunch around here and will always find the same example elsewhere being retailed for "old money" and use it as a stick to beat you with.

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Prices of used vehicles will fluctuate up and down but if trade prices rise then generally so will retail prices so there is still a profit to be got.

However a large part of our income is from service work and when our consumables are showing such big price increases its really going to squeeze us. Increasing our prices to the customer will lead to a drop in business. 

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The other problem is parts

I'm not a great user of euro but its like they have nothing in stock and it has to come from their main despatch area

Oil gone up 20% I've found this month

I dont blame brexit

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Brexit has stuffed getting parts in from Europe.

First we voted to leave. The pound tumbled and hasn't recovered since.

Then we actually did leave, and along has come the problems with physically getting stuff here, and all the extra tax, duty, customs and haulage costs that have come along with this.

The pound still hasn't recovered so its a double whammy really.

It's what we voted for I guess - Costing us a small fortune getting some parts that we regularly get in from Europe. Had no choice but to try and pass some of this on.

Covid has thankfully masked most of the issues for most regular people. They pay a bit more for things, and don't worry about any of the problems that it causes for businesses that actually try and trade with the biggest trading bloc that we are geographically part of. Last year we could trade parts with 500 million people without issue. Now we can only trade with around 70 million without problems.

At least we've taken back control - whatever that means...

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2 hours ago, It's me said:

The other problem is parts

I'm not a great user of euro but its like they have nothing in stock and it has to come from their main despatch area

Oil gone up 20% I've found this month

I dont blame brexit

Yes, its crazy. Poor availability and sharply rising prices. Not seen this before in 40 years of this business. What the hell is going on?  

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7 hours ago, FHP11 said:

It's what we voted for I guess

It’s what some people voted for.

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19 hours ago, Rory RSC said:

Why would the car dealer with stocking not sell for profit? Dont understand?

Come across one or two that panic Rory , getting close to pay down day on such as Next Gear or having to maintain a target turn if funded by such as a major Finance Firm , they get into a circle of having to turn money over to maintain the level of borrowing at a low % , 

Vicious circle of stress for no returns , seen one guy just give in and leave the job with it all folding in on him .

Pleased we don't play those games 

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9 hours ago, Halfpenny said:

Yes, its crazy. Poor availability and sharply rising prices. Not seen this before in 40 years of this business. What the hell is going on?  

This is going to sound a bit ‘off’ but does it really matter? Surely the price is passed on to the customer (directly, or in the case of vehicle sales, indirectly) & if they don’t like the price they can shop elsewhere. Perhaps this is an overly simplistic view but that’s how I see it. 

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23 hours ago, CRW said:

I can only assume he is buying at these current sky high figures and can not return profits at these prices.  He will have to use his stocking loan quota or will be penalised, so its just a case of turning them over. Seems a pretty bleak scenario.  I have stopped buying at the moment as I don't have the confidence that these prices are sustainable.  Potential customers are coming off the furlough scheme, thinking about holidays etc and I think the demand will slip slightly. I simply don't want to get caught out with a forecourt of expensive stock.  However, if this isn't the case I will run with it, but I wasn't going to be the first to put my prices up.

Whats a stocking loan quota and why would you be penalised for not using funding?

If you have stocking you still have to make money on the cars you know, its still business.  

I use funding, I don't have a quota or target, its is my business and my rules. It allows us to hold more cars than we could organically and by using 'their money' I get to make more money for me.     

I get the panic selling if its coming to an end but at the moment we simply cant buy and sell quick enough seems like anything we buy stick £2/3k on it and its gone in no time.  Cant fathom why anyone with funding wouldn't be aiming to make money.

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4 hours ago, Rory RSC said:

Whats a stocking loan quota and why would you be penalised for not using funding?

If you have stocking you still have to make money on the cars you know, its still business.  

I use funding, I don't have a quota or target, its is my business and my rules. It allows us to hold more cars than we could organically and by using 'their money' I get to make more money for me.     

I get the panic selling if its coming to an end but at the moment we simply cant buy and sell quick enough seems like anything we buy stick £2/3k on it and its gone in no time.  Cant fathom why anyone with funding wouldn't be aiming to make money.

Years ago when I was approached by Nextgear, it was made clear that I would have an allocated fund of say £100k, but that if I didn’t hold at least 80% of it in stock I would be penalised with higher rates, extra charges, more inventory assessments blah blah. At which point I politely declined.  If you can make it work for you, that’s great but it’s not for me. If you can put a £3k margin across a car at these prices, again well done.

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