Auto Parts Cost Structure Analysis

Published In: Sourcing TipsCreated Date: 2021-03-19Hits:1104

Today we are going to talk about the cost structure of auto parts.

Almost all auto parts cost consists of Mould fee, Material cost, Processing cost, Testing cost, Package cost, and of course there will be some implicit cost like management cost. all we are going to talk about is the explicit cost.

Not all auto parts' cost structures are the same, it depends on the material and the process for manufacturing the parts. For example, plastic parts are mainly expensive on mold fees when developing while it's cheap when manufacturing them (normally plastic material is much cheaper than metal), and when we are talking about rubber parts, the mold fee is also not expensive.

 
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What can we benefit from learning the cost structure of auto parts? It will help us better define the cost of an item. When we are sourcing and purchasing something, we know which price is real and keep our business safe. For example, the part's cost is just $2/pc, you buy it from China at $10, and your competitor buys it with $5 and sell it at $7/pc, so you know you are going to take a serious loss. 

byAndy Han

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