Comment Labor cost is bad, but the parts cost is worse (Score 1) 1246
Certainly, labor costs are a problem, but I think that the costs of the parts is a bigger problem that won't get solved any time soon.
Take the BMW example in the article. The car cost $30k new, so the damage must have been $16 at least. Say that all six airbags went off, and using the numbers in the story ($1k per bag, and "even more" for the sensors -- call it $1.25k), the labor costs were around $13.5k. That's astronomical, to be sure, and it's the number that gets your attention. But look at the parts...these figures mean that the cost of the airbags & sensors is $2,500 or so.
That may not seem like a lot, but think about it. If you figure that transportation costs, dealer profit eat up $1,000 of the car's price (it's coming from Germany, after all), that means that the airbags come out to around 8.6% of the car's total value. Does anybody really believe that the airbag system cost BMW that much? Of course not, I'm sure they spent less than a fourth of that. This highly profitable parts market is one of the reasons that I can lease that $30k BMW for $299 a month.
The invisible hand of the market may be able to fix the labor problem, but it can't directly address the parts problem because this information isn't generally known. Maybe articles like this one will cause people to take a harder look at the real cost of owning different cars when they are shopping for new ones.
Take the BMW example in the article. The car cost $30k new, so the damage must have been $16 at least. Say that all six airbags went off, and using the numbers in the story ($1k per bag, and "even more" for the sensors -- call it $1.25k), the labor costs were around $13.5k. That's astronomical, to be sure, and it's the number that gets your attention. But look at the parts...these figures mean that the cost of the airbags & sensors is $2,500 or so.
That may not seem like a lot, but think about it. If you figure that transportation costs, dealer profit eat up $1,000 of the car's price (it's coming from Germany, after all), that means that the airbags come out to around 8.6% of the car's total value. Does anybody really believe that the airbag system cost BMW that much? Of course not, I'm sure they spent less than a fourth of that. This highly profitable parts market is one of the reasons that I can lease that $30k BMW for $299 a month.
The invisible hand of the market may be able to fix the labor problem, but it can't directly address the parts problem because this information isn't generally known. Maybe articles like this one will cause people to take a harder look at the real cost of owning different cars when they are shopping for new ones.
