The thing is, I dont think it is greed which is the problem.
From 2004 to 2009 the car industry was booming, and dealerships were just flowing with huge profits and of course massive overheads and were doing extremely well making money from Service, New & Used and Parts.
All these departments were doing well, some dealers even moved out and bought even bigger properties with even more expensive overheads, spending money because times were good.
Now it is very different. Dealerships are relying on service and parts to survive and even then some dealers are only making 2 Million rand profit overall monthly, and thats all departments combined! You cannot buy stock, run promotions and keep your doors open with that profit and I am not talking about small fry dealers, I am talking about dealers like Auto Atlantic making these profits and they are a huge dealer!
Much like with all business's, when times are hard you start to exploit your strength's and this is where we currently are. Excessive labour costs, huge inflation on parts prices and of course poor service to match.
Right now, big dealers are relying on their service and parts department to keep things floating... Dealers realise that they can make up for their losses in profit by making money on slow moving parts especially on older cars.
I explained this in another thread... BMW parts departments are usually right next to the showroom, why? Because they want you to look at that 320I on the floor with R40 000 trade assistance, R20 000 trade in assistance and a R30 000 discount. They want you to see the plush, fresh leather, the shiney mag wheels and perfect paint so that when the parts department says R6500 for a few bits and bobs your mind (usually helped by the salesman who greeted you on the floor) rather reverts to using that R6500 as a deposit on a new car.
BMW would rather you purchase a new car, than spend R6500 on your 10 year old M5. All marketing, sales and focus in a dealer is on moving new cars. Dealers survive on kick-backs from BMW SA and these are what keep the dealership running in these hard times.
This is the unfortunate truth of what most car dealers have become, it is a huge pity as I feel the focus within dealers should not just be on selling new cars but also keeping existing customers like yourself happy with competitive part pricing and excellent service.
New car sales uber alles. :thumbdo:
Mike