Losing ground to parts suppliers and wholesalers in an increasingly crowded marketplace, savvy Original Equipment Manufacturers (OEMs) know that things must change in competitive parts pricing.
Those that initiate more rational, market-based pricing can realize impressive outcomes. It is about understanding the real competitors, identifying customers’ price sensitivities, determining the right market positioning for each parts category, and improving dealer and customer communications and incentives. While it can often be difficult to resurrect parts market share, there are examples where it can be possible with targeted pricing actions across specific parts categories.
Spare parts make up approximately ten percent of total sales, up to half of net income. Of this, the competitive parts segment generally makes up more than 50 percent of parts sales—and is the main focus of parts pricing managers.
As manufacturers focus on increasing shareholder value in this environment, there are three levers that can directly improve a company’s profitability and stock price: revenue enhancement, asset productivity and cost containment. In such a high-stakes environment, the price of inaction is simply too great. Reinventing competitive spare parts pricing is a must for OEMs to build market share for key spare parts while achieving strong margins across their competitive parts portfolios.
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