Why do auto repair shops charge more for parts?

Because charging for labor alone doesn't cover costs or expenses, repair shops sell parts at a profit to make up the difference. By charging only an hourly rate, company expenses will not be paid. Parts, part marking, and workmanship are the primary components of an auto repair invoice. The labor and parts margin is how most of these charges cover overhead expenses: utilities, tools, diagnostic equipment, information systems, etc.

The question is, how are these charges decided? Labor rates are artificially low in auto repair. They are subsidized by higher parts prices. For decades, there has been a steady flow of mechanics and others opening workshops and announcing that you can buy the parts yourself or they will supply them at cost. Practically every one of them closes their business early because they don't charge enough to pay the bills (if someone points out an exception, it's usually a kind of illegal “speakeasy” that works in someone's backyard and avoids paying taxes and other typical costs of a legal business).

All of these online prices are irrelevant to the discussion of how much auto repair shops increase their prices because repair shops don't shop from online sources.

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