Bet the Home Depot doesn't do this...

5030 · May 28, 2004

Re: Bet the Home Depot doesn\'t do this...

( No but it does constitute business. Believe me, they don't make a mint on service. )

I disagree with that statement.

A dealer makes more on service and parts than on the actual sale. If a dealer only sold equipment and didn't service it, he'd be missing out on at least 75% of the revenue. HD sells a lot more than JD lawn tractors. A JD dealer only sells tractors and/or farm implements

Any dealer that gages his business on loyal customers and passing on the walk-ins is pretty naive. /forums/images/graemlins/blush.gif

Any time I walk into my Kubota dealer, the shop is always working on brands other than what they sell. Could be green, red, orange or whatever. They have a good reputation and it profits them.

_RaT_ · May 28, 2004

Re: Bet the Home Depot doesn\'t do this...

They don't make of mint on the sale of the tractors either. Dealers of compacts depend on far more then one brand to carry them through and make ends meet. Mechanical help according to one of my local dealers is painfully hard to get. Most mechanics move on to higher tech services involving todays autos and higher wages where the work is constant the year around according to him. Either way, it's not a business I personally would want to risk a venture into.

cedarman · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

Home Depot just opened in my area recently. When I was in there looking at the new store I wandered over to the mower section an was surprised to see my local Deere dealer stickers on the back of every mower. When I was looking at the 2210 at this dealer and then noticed it gone I asked him if he had sold it and he replied that he had "just taken it down to Home Depot". Guess they (HD)work out something with the local JD dealer??? I'll ask my dealer about the arrangement, I notice they sure keep a lot more mower inventory around now that HD has moved into town. I agree with an earlier post, service depts are a profit center, but as in all trades, the hardest thing to find and keep is help.

SteveH_CT · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

My brother doesn't sell CUTS (I've tried getting him to), this is commercial mowers, and small engine stuff - trimmers, chainsaws, ZTR's, etc. There isn't a lot to be made repairing this type of stuff - selling parts is even lower lower profit. I never said walk-ins were passed over - my original point is that customers who buy there will simply get first dibs on service.

Have a good one.

cedarman · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

Steve H--You are probably right about trying to compare different industries or even businesses to each other-autos vs tractors vs mowers vs areas. I'll try to relate some facts I remember. About 12 yrs ago the bank called me in to look at purchasing a business they held the paper on. It turned out to be the local the local dealership here in town that sold JD and other related products, to include nursery and landscaping. When I looked at the P&L statement and how they made their money I was surprised at the lack thereof, hence the phone call from the bank. What I saw was a lot of overhead and not enough cash flow. For the inventory they had to carry on JD and the parts back up what they made selling JD did not cover adequately cover cost, in other words, selling mowers and tractors and skid loaders wasn't paying for much as little profit was made. Looked like a good deal for Deere but not so great for the dealer for the capital expended. Basically, what they made from service/repair paid for the cost of doing business. Where they made their best profit was in nursery and landscaping. I walked from the deal because the only thing that looked good was the landcaping end. I was building and selling a lot of houses at the time and the bank thought it would be a good fit. I thought "Why do I need all of this overhead just to keep Deere supported, I can add landscaping without the asset requirements of this dealership." The new buyers went heavy into the landscaping end and gradually began to expand the Deere end, which surprised me. They hung in there for about 10 yrs. The new owners (2-3yrs) have really grown the Deere selection with major CUT offerings and built a new large expansion service building. Now, they also supply Home Depot with mower inventory. The only thing I can figure there is they are after service unless Deere has improved the profit for dealer sales. Bottom line for me was that it looked like a tough way to make a living for the debt incurred.

SteveH_CT · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

Bulls-eye - the manufacturers can make it difficult, and expensive to keep their franchise. Overhead is the killer, as is floor planning. They often have minimums that you have to keep on hand in order to keep representing their product line. Factor all the other asst'd costs into that and it isn't a "get rich quick" business. I say that sarcastically, because you just plain don't get rich - it's a living, just like so many jobs we all do.

I think Ed's (my Brother) biggest gripe is the folks who chose to buy at HD, or walmart, stores like that - because they think they're saving a few bucks. They often do save money - but the product isn't the same. I've even learned from him that the same brand will sell different grade products to the chain stores as compared to the same brand product he sells (Toro for example). But then they're at his door for the $2 filters or to get a blade sharpened... no money in that unfortunately. There certainly are a lot of financial dynamics that go into a small store like that - For me it's part of being in a community. I like to keep the business local - so far it's gone both ways too. The shop I got my Deere at also sells smaller yard equipment - everytime I've bought something Matt always throws in something... even if it's just free supplies or service. Things like that will keep me away from the chain stores, and makes me pleased to buy from the local shop.

cedarman · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

I'm with you 100% on supporting the local guy. Having been in the building business for a living, dependable tools, equipment, and service was what counted. I always called the Walmart stuff throw away because if you used the equipment they sold every day, day in day out, they burned up-yet the same brand equipment you bought at the lumber yard was commercial grade and made you a living-same brand different guts and that's why it cost more. What was more important to me was the local guy like me trying to make a living-any help I could throw him I felt he had coming. I would never be able to look a local dealer in the eye if I bought something from Walmart or some other big outfit and then asked the local guy to work on it for me, it just wouldn't work for me. If you live in a smaller community you understand what the big discount chains have done-run everybody out of business for the most part. Big may be inevitable but it isn't necessarily better and if you don't watch out, it isn't any cheaper.

yellowsocks93 · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

Our service department makes most of our profit and parts but it is mostly our service department. We are generally pretty busy and we mainly service Massey since we used to be a Massey dealer and John Deere. I never see any other brands come in because they are just not in the area but if your like me and you own Deere you will take it back to that brand's shop for service.

Rat is correct when he says that mechanics will look at being a car mechanic where they can make 70 grand a year compared to a way lower tractor mechanic. Plus being a tractor mechanic is not all fun and games, there is a lot of lifting done with forklifts, jacks, and by hand. I think it is one of the harder mechanic jobs to get into after what I have seen splitting huge tractors and they are not clean like cars to work on. That's why if a machine is real dirty I will clean it up as best I can for the mechanic so he has an easy time finding all the bolts. It costs 20 grand for a new transmission for a JD 9400 articulating tractor and another 20 grand to put it in. This was a huge job one mechanic had to do. Lifting the cab off, disconnecting all lines, and so forth. Way harder than working on a car. Sometimes I will go back to my dad's car dealership and look in the shop and the cars are clean and easy to work on with lifts and stuff. I know the mechanics want more pay for the work they do so unless you really like tractors it is a hard life to do. We do have a new tech at JD school right now but one mechanic I talked to said it was a bad move since he will be making so little money.

Ole_Hickory · May 29, 2004

Re: Bet the Home Depot doesn\'t do this...

 selling parts is even lower lower profit 

The price of some of the parts I have had to buy for my JD 4400 I thought was plenty high,I suppose John Deere is the one making the big bucks on the parts .