Why are replacement parts so incredibly expensive?

[5030]

If you attempted to build any tractor or implement from spare off the shelf parts, you would never be able to afford it.

 

[Jims1025R]

The turn signal lens of my JD1025 was broken (while my wife was cutting grass, she admitted it.). While buying a drive belt for a mower, which the JD dealer had in stock, I inquired about ordering a replacement lens. A few computer strokes later, and the parts guy said "I have one in stock". $19. Yes, expensive for a lens, which probably cost $1 to make. But, it was bagged, tagged, inventoried, boxed, shipped to my local dealer, who had the foresight to think my wife might break one, and he held it in inventory at his cost for who knows how long, until I came along. Along the way, its value increased $18. Was that reasonable? Well if minimum wage is $15/hour, and an hour's total time was spent documenting it, and getting it there, to wait for me, let alone the cost to hold in inventory, I can't complain much.

On the other hand, has anyone gone to purchase the sets of shouts for the end of a vacuum cleaner hose!?! The set of four snouts is usually $20. They must make millions of them, and every hardware store stocks them without a thought. Yet, were they to be pink, and a child's toy, we'd think $1 was the right price for them!

When I think of the hours I have spent searching for a part I need, or more hours I have spent making it, if I can find it for purchase, even costly, it's usually less costly than my time to "go around" buying the proper part!

 

[Torvy]

I think it is part and parcel of our disposable society. If parts are cheap, your need for new equipment would be less. The hassle in finding and repairing equipment drives many to simply replace rather than repair. Increase in demand leads to higher prices. If you make the equipment, what is the incentive to make 100% margin on a $5 part versus 50% margin on a $2000 piece of equipment? (yes, there are other factors, too). I would hazard a guess that this concept is part of what drives JD and others to make equipment more difficult to repair...think iPhone or Microsoft and when they simply stop supporting things only a few years after sale.

 

[Citydude]

I had the opportunity to visit Caterpillar's factory's building tracked dozers. From the foundry making rollers and track links to the assembly line.

The day we visited the dozer assembly line, they were building D 10's. I can't remember how many they could produce in one day but it was a jaw dropping number.

The tooling, machinery and technology was astounding.

It was a lesson learned on just why we paid so much for a D10.

 

[Sportsman762]

Having worked in the whole goods industry (construction equipment) in a variety of functions, product support the longest, I can assure you selling OEM replacement parts is not “gouging”. There is significant overhead in the service parts business along with different pricing classes of service parts.

Proprietary parts are going to be the most expensive. Those are typically parts that are designed by and unique to the product (Think transmission housing casting on a Kioti). Then pricing tends to go down from there to commodity items like nuts and bolts.

Some OEM’s price commodity items high as they simply don’t want to bother with selling 1 bolt. Others are competitive on pricing of those items. It will vary by the company policies.

YEah, I didn't say selling OEM replacement parts is "gouging". I said overcharging for replacement parts is gouging. A 205KDD Fafnir bearing should not cost 5x as much just because someone lists it as an OEM part.

It is not quite this clear. The OEM will sometimes buy from a distributor to reduce number of vendors they have to deal with. So figure 30% gross margin for that distributor = 42% markup $10 part is not $14.20. The part now needs to go to a repackaging firm so add another $2 to get the part in the OEM's package so now we are $16.20. Manufactures often have high overhead as Rich stated so figure 40% gross margin or more so now part is minimum $27.00. Now the dealer makes 30% GM so retail cost is now $38.57 on a part that was sold for $10. It is not unrealistic, nor is it the OEM screwing the owner. You also have to remember that OEM's generally do not look for the best deal on after sale parts, they are looking to maintain minimal inventory, and minimal staff to keep the supply going. We can sit here and complain, but Rich B1 stated in great detail what your seeing with high OEM prices. The numbers I list are ball park figures for the Ag industry, based off of what I have seen when dealing with Ag OEM's at work.

 

[IndyJay]

What size belt goes on a JD 394x mower deck; primary and secondary? What size bearings go in the blade spindles? Just curious.

 

[/pine]

One of the main reasons parts are more expensive is higher labor costs...maintaining and constantly updating inventories and databases requires people skills even with the most sophisticated automated systems...
Add to that all the other factors especially supply chain and delivery costs...

 

[JasperFrank]

Just had to order a set of "pins" for my 1220 ford three point. They were only sold as pairs, which was okay, and individually, about $50, delivered. That's not bad for a bracket and a pin mounted and holes drilled in it of heavy steel.

 

[IndyJay]

One of the main reasons parts are more expensive is higher labor costs...maintaining and constantly updating inventories and databases...

Explain why it would cost more for Deere and other dealers to do this than Autozone or Tractor Supply? Especially since the dealers have a much smaller selection of belts and bearings to maintain than other suppliers. Also consider that they would have a higher volume of these brand specific items, typically translating to lower cost.

Sorry, I ain't buying it. I understand that tractor specific parts are costly to maintain, especially for out of production models, but not commodity parts like bearings, seals and belts. It is price gouging, plain and simple.

 

[/pine]

Explain why it would cost more for Deere and other dealers to do this than Autozone or Tractor Supply? Especially since the dealers have a much smaller selection of belts and bearings to maintain than other suppliers. Also consider that they would have a higher volume of these brand specific items, typically translating to lower cost.

Sorry, I ain't buying it. I understand that tractor specific parts are costly to maintain, especially for out of production models, but not commodity parts like bearings, seals and belts. It is price gouging, plain and simple.

go into Autozone and try to buy a model specific part for a car that is out of production...more times than not it will have to be ordered...TSC mostly stocks generic parts except for the absolute most common older tractor models..
So that part of your argument don't hold water...

Actually you're preaching to the choir...look at all the publicly traded retail/commodity securities...all of them are reporting above average profits...not just the oil companies etc...it part of the greed that is called "Corporate America"...They "owe" it to their stockholders to take advantage of every opportunity to increase profit margins...