View Single Post
  #8  
Old August 19th 05, 09:16 AM
Ted Mittelstaedt
external usenet poster
 
Posts: n/a
Default


"Bill Putney" > wrote in message
...
> Ted Mittelstaedt wrote:
>
> >
> > It's not the cost of manufacture that is the problem. Raw crude is

selling
> > at about $1.20 a gallon. I would guess after refining and blending with
> > the additives, the trans fluid is probably selling at under $8 a gallon.
> >
> > Now, how do you get from $2 a quart to the $8 quart that it seems to
> > be selling through the dealer network?
> >
> > That is the real problem. Standard retail markup is 400% and ATF+4
> > isn't available outside of a dealership, so a trans shop that uses a lot

of
> > it in customer transmissions has to buy it by the case from the chrysler
> > dealer. They can't go to whoever they buy bulk motor oil from and
> > get it from them. Nor can you or I go to a discount auto parts place
> > that has a lower markup, and buy it from them. Nor can you or I
> > wait until a regional or national auto parts place puts it on sale.

>
> A couple of points:
>
> (1) It is not selling for $8 a quart. I just called my local dealer,
> who is not known for discounting and in fact typically charges full
> list, and they told me they are presently charging $4.40/qt. That's
> cheaper than the around $5.20/qt. they were charging 2 years ago (I had
> read on the forums that the price had dropped a little over the last
> year or two, so that is consistent with my local dealer). As a point of
> reference, whenever we have discussed (on R.A.M.C.) the wide variation
> of dealer pricing of ATF+4 a year or two ago, the worst price I ever
> remember seeing posted was $7 - maybe $8 - but that doesn't reflect the
> current non-competitive (i.e., non-aftermarket available) pricing. If
> everything is linearly scalable, I would say worst-case
> gouge-me-'til-it-hurts dealer pricing should be around $6.35/qt now.
>
> (2) ATF+4 is supposedly a semi-synthetic. I'm not sure I know much
> about what that means, but since synthetic motor oil costs a bit more
> than non-synth, I assume there are some real additional processing costs
> to "create" a synthetic or semi-synthetic (again - whatever that means).
> Point being that synth motor oil being 4 to 6 times the price of
> non-synth, I would think you have to scale your pricing of semi-synth
> ATF+4 a bit higher relative to the price of raw crude (to refelct the
> retail price of semi-synth relative to non-synth).
>
> With it going aftermarket, the price should drop - which maybe was your
> main point (which wasn't clear to me after I had finished reading your
> post).
>


The main point I was trying to make is that the bulk of the cost of
each quart is added to the quart by the distribution chain. The
dealer parts department is about the most expensive auto parts
distribution chain there is - and for good reason, the dealer parts
distribution chain must warehouse the most obscure and little-used
part in the car - and as such it's generally a terrible place to buy
a commodity item like a fluid.

Compare Walmart's distribution chain with Mopar. What the consumer
benefits the most by - which is the entire point of the anti-trust laws
by the way - is to have consumable commodities like gasoline, motor
oil, grease and transmission fluid that everyone needs to buy, to be
available for sale through the Walmart's of the world and their distribution
chains.
(while trans fluid isn't normally consumed, since it has to be changed
periodically, you do consume it over the life of the vehicle)

When that happens, those places represent sufficient threat of competition
that the expensive distribution chains either have to lower their prices
to keep the same volume, or just accept the loss of revenue.

Ted


Ads