Originally posted by Tom S. Please note I said profit, not revenue. Profit is the money left after expenses, which include wages. The profits from the foreign transplants goes back to the home country.
You are correct.
And the profit (money left over after expenses) of the Big 3 does not stay entirely in North America. As I pointed out, all of them are operating on the world stage, and currently are investing heavily in overseas operations.
Originally posted by Tom S. Your statement on manufacturers making money on service and repair is totally wrong. Vehicle manufactures don't make a dime off of the labor costs for repairs.
Sure they do. Every dealership operates as a franchise of the brand it sells and services. A portion of every dollar that is paid to the dealership goes straight back to the manufacturer.
Originally posted by Tom S. Warranty work cost the manufacturers, and once a vehicle is out of warranty, any cost of repairs is paid to the dealers, not the manufacturers.
True.
The manufacturer bears the cost of warranty work, and pays that to the dealer franchisee, following a strict labor cost guide. Dealers dislike doing the majority of warranty work because the techs cannot always perform the work in the time allowed by the manufacturer.
The dealers will do everything they can to get out of doing warranty work.
Even lie and say it is "normal wear and tear".
But not all work performed by a dealer is warranty work. And as I pointed out, dealerships operate under license from the manufacturer, and the manufacturer gets a percentage of all business performed by those franchises.
Plenty of car owners are convinced that the only proper service is that done at the dealer where they purchased the car. I have known many people over the years who have taken their cars to the dealer religiously for the periodic service.
Some of them have come to me to ask about charges and services that were performed. Having been an ASE certified auto and truck master mechanic for 30 years they felt that my background and professional expertise might be of some help. I have always been shocked to see how much the dealers charge for things that can not even be done, like greasing the u-joints and steering components on "lubed for life" parts.
These dealerships charge upwards of $800 for a 60,000 mile service.
For what amounts to an oil and filter change.
Then they find all kinds of things "wrong" with the car and charge the customer for repairs and parts.
It's a freakin' racket, and they rip off the customer, who doesn't have a clue.
Originally posted by Tom S. At best, they may make money from parts sales, but even that is iffy since most people don't buy their parts from dealers unless they can't get them elsewhere.
There are plenty of dealer only parts on cars. And many car owners are convinced that the only good parts available come from the dealer. In some cases that is correct, but not all.
For instance, I will only buy oil filters from the dealer for my Subaru and Toyota. The aftermarket filters are inferior, cut them open and you will see the difference.
The oil and fuel filters for the Cummins engine in my Dodge pickup are very expensive at the Dodge dealer, and I know that I can buy Fleetguard brand filters at the local heavy truck shop that are made by the same company that makes the filters that Dodge sells. Take them out of the box and set them next to each other, and besides the Mopar logo on the ones from Dodge, you cannot tell the difference. Cut them open and they are identical.
Originally posted by Tom S. You should also remember that with the exception of the engine and transmission proper, along with the sheet metal, the auto manufactures make almost no parts for their cars, instead buying them from suppliers. In most cases, these suppliers sell parts used in repairs, not the auto manufacturers. That is why you see far more car parts places around than car dealers.
The manufacturer branded parts are produced and sold under license by the manufacturer, and the manufacturer gets a percentage of the money earned from those parts sales.
Originally posted by Tom S. And none of the parts they sell come from the auto manufacturers.
"None" is pretty absolute.
I wouldn't go so far as to say "none" of the parts come from the manufacturers.
Say for instance the gas tank on your Ford Focus gets damaged in an accident and needs replaced. Sure, it was produced by a vendor, most likely Kautex Textron in Lavonia, GA. But you won't be able to run down to your local Auto Zone and order one up. And you won't be able to buy it directly from Kautex Textron. No, you will need to go to the local Ford dealer and place an order, and when you get it, it will be packaged in a box that bears the Ford logo.
And just for illustration, let's say that in that same accident the oil pan is damaged, and can't be repaired by simply welding a hole that was punctured in it, or it can't be hammered back into shape and reused. You will be hard pressed to get a wrecking yard to sell you just an oil pan off of an engine that they have pulled from a wrecked Focus. So you will need to got to the dealer and order that too. And again, it is likely that a subcontractor has manufactured the oil pans for the engines that Ford builds for the Focus, but you won't be able to buy that part from the subcontractor through the local Auto Zone. It will be a dealer only item, and come with the Ford logo on the box.
You won't be able to buy the headlight or taillight housings at the local Auto Zone either. The dealer will be the only option.
If you need to replace the passenger door interior panel on your Focus the dealer is the only option.
Try and buy a wiring harness from Auto Zone.
Got an F250 4 wheel drive? How about this? You go out 4 wheeling, run over a stump and bend the driveshaft, front axle trailing arm and front axle housing. Now if you have a good driveshaft shop nearby you can get another shaft made up. But the trailing arm and axle housing? Good luck. So it is off to the Ford dealer, give them the pertinent information, and order up a new trailing arm and housing. The parts show up, most likely fabricated by a 3rd party vendor, but bearing the Ford logo, and only available through the Ford dealer.
There are thousands of parts on cars. And plenty of them are dealer only items. And the dealer pays a percentage of every parts sale to the manufacturer as part of the franchise agreement.