gone up the hill
Member
- Location
- Devon
Thing is costs have to be cut in all areas of the business when prices are on the floor, low farmgate prices and high input prices aren't sustainable for any industry for long!!
Reco to shut?
- Thread starter Afx9010
- Start date
Thing is costs have to be cut in all areas of the business when prices are on the floor, low farmgate prices and high input prices aren't sustainable for any industry for long!!
Dealer
Member
- Location
- Shropshire
Yes agreed they do but all the expansion was done last year and the year before
It hard to turn the tap off once you have invested the money and taken on staff
It takes 4 / 5 years to train a workshop technision before he his good enough to earn his keep
When sales are on the up you need to run fast to support them when they are down its harder to cut those overheads without cutting your income.
As for the big 4 you will se the big dealers getting bigger and the manufacturers having more control over them, they already have controll now because the way stock,/ new & used is funded.
Don't be surprised if a big dealer fails and is taken over my the manufacturer in the next year because they are to big to be sold as the money required to fund them does not justify the return on risk.
Cowabunga
Member
- Location
- Ceredigion,Wales
If you think dealers have 50% or far more margin on anything but odds and ends, screws and suchlike, then you are sadly mistaken. Obviously a one man band has lower overheads than someone who employs a storeman and reliable full-time counter service. That's the nature of the beast and if you wish for the industry to be served by jack's of all trades but masters of none, so be it. But I want well stocked stores with someone behind the counter whenever I want something. That costs. And they don't generally have a 70% margin [the one 50% cheaper according to you isn't a charity either] to give away.
gone up the hill
Member
- Location
- Devon
The chap im talking about has 3/4 members of staff plus himself and has a proper trade counter ( open 5/6 days a week ) and also deals in tractors/ machinery so is far from a one man band!
Yes of course he has to make a margin even thou he is 50% cheaper than the main dealer's but that just goes to show you either what a large profit margin the dealers are making on parts and/ or just how high their cost base is and how un-sustainable it is going forward!
Dealer
Member
- Location
- Shropshire
All business has a different cost Base to the next one.
Volume all sales will dictate income if small is good why have all the small shops gone replaced by super markets.
Buying power is one effincy of scale is another
Under your rules one man band farmers should get less for produce than the bigger guys employing staff
gone up the hill
Member
- Location
- Devon
Supermarkets are doing well because they sell the product today and get paid for it today then pay the supplier between 14/90 days later, you cant really go wrong on that type of business model!!
My point is many dealers have far too high of a cost base and they need to address this or else they cannot expect to sell machinery/ stay in business in the long term!! ( unless farmgate prices rise dramatically )
Cowabunga
Member
- Location
- Ceredigion,Wales
I know exactly what their selling uplift [margin] is and it is nothing like 50% on anything worth more than a tenner generally speaking. Its no skin off my nose, but you are misleading people by talking rubbish.
I could say that the local dealer for some of my kit was making a massive profit when he quoted me over £600 for a part the other day. A part that I sourced in America for £35 and imported after all costs for just over £100. But he was not, although someone was making a very tidy margin had they sold it to me. The dealer was obviously going to make more money on a product that sells for £600+ than one that sells for £35, but his supplier insisted on the retail price and net price on that part.
I cold argue that even the £35 selling price in America was too high, because the same part is available on Alibaba, made in China and possibly of dubious quality [possibly good] at only $3 each. Minimum quantity order of 1,000 units though.
You have no idea how much stuff needs to be sold and what gross income generated at what margin to pay 4 staff plus premises, hold stock, insurance, business rates, so on and so forth, to leave a profit and a living for the business owner. There is no such thing as a shoestring for such a business.
Lower and lower margins leads to bigger and bigger businesses, not smaller ones. You only have to look at farming to realise that much.
Cowabunga
Member
- Location
- Ceredigion,Wales
How do you know what their cost base is? You certainly don't know what their gross margin is, never mind their net margin.
gone up the hill
Member
- Location
- Devon
You have no idea what their margin is!! ( and neither do I ) and to say other wise is complete BS!!
Some things they might be 10% cheaper but on something like a clutch pack they are easily 40/50% cheaper than the main dealer sometimes..
You own example states that your dealer wanted £600 for a part that you imported for £100 and yet you still say he isn't making a massive profit, like that clutch pack most items come from the same factory and are identical yet one is a lot cheaper not going via the dealer!
Dealer
Member
- Location
- Shropshire
Most agri dealers model is 10 ish percent gross 1. To 2 % nett if you are lucky so business turnover of 20 million will turn 200 thousand nett if they are lucky probably carry 5 to 8 million of stock
Not sparkling is it
Not sparkling is it
gone up the hill
Member
- Location
- Devon
Quite clear that their cost base is too high as they are unable to reduce 2nd hand machinery prices for example to generate sales..
gone up the hill
Member
- Location
- Devon
Most main line dealers carry very little stock in real terms and much of it has to be ordered for next day delivery
- Location
- Cumbria
The demise of RECO is a very sad day for the machinery industry. Built up as UK manufacturer in the days of Trade embargo's with the USA. Harold Ruston and the Ruston family created alot of British jobs and had pride in providing a range of kit made, serviced and supported well, by a British Company. In addition I know the late Harold found it difficult at times to buy from German Companies after being personally involved in the liberation of German prisoners of war. But, seeing the market change, he did not allow this to stand in the way of the Company and over the years imported from several German Companies and built a large business.
RECO was a family business, providing good kit with good after market support, but as the saying goes....
Nothing is forever,
RECO was a family business, providing good kit with good after market support, but as the saying goes....
Nothing is forever,
Dealer
Member
- Location
- Shropshire
Having run a dealership with 4 depots 70 staff 50 million turnover I think I know what dealers inventory is if you are counting the parts that they sell one every 5 years why would they stock it. On one hand you are saying reduce cost on there you want them to increase stock,/ costs.
Work with you dealer plan ahead you repair / service they will then purchase parts on stocking rates and pass on discounts to the customer
Overnight parts service is to improve machine downtime not reduce prices
I doubt your one man band holds anymore stock than the main dealer
Cowabunga
Member
- Location
- Ceredigion,Wales
You are very much mistaken.
As for pattern parts, they are often, but not always cheaper. As far as the part I quoted, which is a water pump actually, there are no pattern parts available in the UK, so I had to import it myself from the USA. I know it is not an original equipment Japanese made product and I take the risk that it doesn't fail in the near or far future. The dealer has to go with the manufacturer on such items.
However, most dealers will be able to source pattern parts as an alternative in many cases, such as clutches and steering joints and filters and the better ones do so when appropriate and a substantial saving to be made for the customer. Of course they do. They make the same margin on the pattern parts as they do on original equipment parts. Often there is hardly any saving from pattern parts and even more often a customer will insist on 'genuine' and some will even be insulted if offered the alternative.
gone up the hill
Member
- Location
- Devon
If a John Deere dealer hasn't sold 3 of a part in the last 12 months they are now not allowed to stock it..
My point was that very few dealers will carry 8 million's worth of parts!!
Grassman
Member
- Location
- Derbyshire
Reducing prices is counter productive quite often.
Reduce the price of the new tractor reduces the price of the secondhand tractor which also reduces the value of your trade in. Trying to bring everything down in value means everyone in the chain will be worse off.
gone up the hill
Member
- Location
- Devon
Reducing prices means you will stimulate demand for both 2nd hand and new machinery..
Cowabunga
Member
- Location
- Ceredigion,Wales
You seem to have little or no idea of how a business that has stuff travelling both ways through the gate works. If used machinery is too expensive it is either because it has not found the person that wants it, and/or because they paid too much for it to a farmer in the first place and can't afford to sell it under cost.
gone up the hill
Member
- Location
- Devon
The only reason they have paid to much for the 2nd hand machine is to make the difference between the 2nd hand and new machine as small as possible as the new machine is over priced to start with!!
- Tags
- parts