I heard from a friend who works in the main dealer servicing department of a well known international car maker that if any spare parts are unsold after 6 months, they are scrapped.
He regularly has to throw body panels and smash up perfectly good windscreens.
Staff are not allowed to purchase unused stock even at cost price.
Would this ploy keep the spares market buoyant for the manufacturer and keep prices higher?
I'm guessing this car maker isn't the only one to be doing this so this could explain why insurance is as high as it is.
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It costs money to store something. It costs money to own something.
One does not throw it away because one has owned it for 6 months. One potentially throws it away because one thinks one is *GOING* to own it for 6 months.
The philosophy being that it is cheaper to throw it away and but it again in 7 months than it is to keep it devaluing on the books and costing storage.
Typically one classifies ones stock into three categories involving differing levels of devaluation or disposal.
If done properly, it is correct and essential.
If you want more, look up MRPII.
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When I bought a new clutch for my old Kia Pride I wondered aloud how long it had been on the motor factor shelf.
They were able to tell me twelve years.
I suggested a discount as they wouldn't be replacing it and it had thrown spare valuable space.
They replied that if they did that, they'd have to charge me extra for its board and lodging.
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>> They replied that if they did that, they'd have to charge me extra for its
>> board and lodging.
>>
>>
>>
That's like my trip to the barbers. As I'm balding, I asked for a discount. He replied that was fine, but he'd have to charge me a search fee.
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>> The philosophy being that it is cheaper to throw it away and but it again in 7 months than it is to keep it devaluing on the books and costing storage.
'Philosophy' be damned. Cheaper for whom? Systematic waste for the profit of, er, some. Justified by smug jumped-up twits who think they are 'executives'.
There are times when the dominant world system, capitalism, invented in this country, really makes a decent person want to barf all over everything.
TCHAH!
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Hmm
Argos sell their surplus on ebay for a good discount. Sounds more sensible to me..
And many car spares operations do the same.. eg An Audi dealer was selling off spares for the original A2 a year ago for half list.
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>> Hmm
>>
>> Argos sell their surplus on ebay for a good discount. Sounds more sensible to me..
Vauxhall have an eBay shop now selling 80's / 90's spares.
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>>Argos sell their surplus on ebay for a good discount. Sounds more sensible to me.
Perhaps.
However, let us assume that demand for a product is 5 per Quarter. Since you have 20 in stock you decide to dispose of 10 of them.
You sell those 10 online at half price.
Trouble is, you sold your surplus product to those people who would have bought your full price ones, so now the 10 you kept don't sell and you only got half the revenue.
It depends on the audience overlap and consequent customer cannibalisation of different sales routes.
Its unwise to generalise, but frequently disposal is better than sale.
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>> It depends on the audience overlap and consequent customer cannibalisation of different sales routes.
>>
Us be 'aving this translated later to proper speak.
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If the bloke looking on ebay is a different bloke to the one that was going to walk into your shop, then you can sell them one each.
If its the same bloke, then you're only going to be able to sell him one, either at half price on ebay or at full price in your shop.
If you have 100 customers looking at each, then there truth will be somewhere in between the two. If there are a total of 195 customers, then the overlap, and consequent cannibalisation is very small and so selling excess stock on ebay should represent largely additional money.
If the overlap is in fact very high, so that there are actually only 120 customers in total, then you will be destroying your own market if you sold some cheaply on ebay, and so you should destroy the excess stock.
Might be proper speak, but its LOADs of extra words.
Last edited by: No FM2R on Sat 18 May 13 at 15:15
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>> Hmm
>>
>> Argos sell their surplus on ebay for a good discount. Sounds more sensible to me..
>>
>> And many car spares operations do the same.. eg An Audi dealer was selling off
>> spares for the original A2 a year ago for half list.
>>
>>
At a good margin then.
We had two A2s- someone wrote the second one of for her and they had stopped making them.
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>> There are times when the dominant world system, capitalism, invented in this country, really makes
>> a decent person want to barf all over everything.
That's the spirit, AC. You'll be back on my side before you know it, tovarishch.
;-)
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>> .......... any spare parts are unsold after 6 months,
>> they are scrapped.
>> He regularly has to throw body panels and smash up perfectly good windscreens.
My Ford dealer can obtain parts overnight, so they have no need to stock large or expensive items.
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someone has to, Ford dont make them and ship them overnight.
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>> someone has to,
But it's only one central supply point, not every dealer in the world carrying unnecessary stocks of every spare just in case.
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But the rules of stock rotation and depreciation apply, even more so the bigger your stock.
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It's certainly routine to write down stock value when it reaches a certain age, and some car dealers have a policy of sending unsold cars to auction after 90 days, but destroying it seems a bit OTT.
The only thing I can think of is perhaps the manufacturer doesn't want cheap parts in the market so refunds some of the cost price of destroyed parts? That would make sense with the dealer refusing to allow staff to buy them.
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>> but destroying it seems a bit OTT.
Recycling I hope. Those materials have a lot of value in them, and plenty of energy was used in making them.
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>> ......... the main dealer servicing department of a
>> well known international car maker .............
Just so that we don't get at cross purposes, is it the car manufacturer (as implied by the thread title) or the car dealer which is scrapping the parts?
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It comes down to balance sheets and P&L accounts.
If you retain the stock you have to value it, as it has a real resale value then you cannot depreciate it, so vehicle parts have a significant value.
Either you sell them or scrap them to get the value off the balance sheet.
THe auditor won't let you write off the value but retain the parts.
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Chocolate manufacturers pulp unsold Easter Eggs rather than sell them off cheaply.
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>> Chocolate manufacturers pulp unsold Easter Eggs rather than sell them off cheaply.
Don't they turn up with other chocolate on very short or historic best before dates at markets?
Seems to be the case at Birmingham Bull Ring open market, or is that just because of Bourneville down the road a bit?
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>> Seems to be the case at Birmingham Bull Ring open market, or is that just because of Bourneville down the road a bit?
Isn't Bourneville the dark chocolate. That might explain the Birmingham connection.
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Nah you're thinking of mouth-breathing knuckle dragger chocolate from Devon.
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>> >> Seems to be the case at Birmingham Bull Ring open market, or is that
>> just because of Bourneville down the road a bit?
>>
>> Isn't Bourneville the dark chocolate. That might explain the Birmingham connection.
There were similar stalls on Kirkgate Market in Leeds. Others sold broken biscuits by the pound.
The Bourneville name comes of course from the Cadbury village of that name built on the outskirts of the city.
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Is the Lindt chocolate Reindeer not the same mould as its Easter bunny with just different wrapping?
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>> Is the Lindt chocolate Reindeer not the same mould as its Easter bunny with just
>> different wrapping?
Neigh.
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major manufacturer scraps parts - No FM2R
