NAGS Pricing Position

We at NAGS have been receiving many calls expressing confusion and concern over the upcoming pricing release. By now, many have received the printed Calculators as well as the electronic data. There have also been numerous reports of various reactions from the manufacturers. I can tell you that we at NAGS did what we have been telling the industry we would do; i.e., we evaluated all available input and made the decision to publish a retail pricing reference that attempts to more accurately predict a fair aftermarket price for glass based on our pricing expertise, knowledge, neutrality and judgment. As a result, the overall average increase in the NAGS Benchmark is 4%. We did this having evaluated published truckload pricing lists that showed an average price increase range by manufacturer from -0.9% (an overall decrease on average from one manufacturer) to +21% with 60% of the manufacturers' average increases exceeding 13%.

When I say "average increase" I mean every part receives equal weight (or value) in the comparison. And obviously, the comparison only includes parts with both a prior and current price. If the more popular parts increased less than the average (or decreased), then the actual overall weighted average increase would be less. And conversely, if the more popular parts increased more than the average, then the actual overall weighted average increase would be more.

Last year, the manufacturers announced "average increases" ranging from 13.1% to 24%. There is little evidence to suggest that these increases were "real" or were effectively implemented at the retail level. Retail discounts continued to climb. When we announce our Benchmark Revaluation, many asked us how we intended to keep our "Benchmark" from once again becoming inflated. There were serious concerns that we were all going through this work with no guarantee that we would not end up in the same place within a few years. It's like going through all the Y2K remediation work on the world's computers, only to find out the world is going to end anyway.

The only option available to us is to continue to apply our due diligence to the task of trying to accurately predict where the pricing will eventually settle. History tells us that announced manufacturers' increases have not been realistic in the long run (and many times in the short run as well).

Apparently, there have been announcements made by some manufacturers that they intend to publish their own list prices. These price schedules appear to be wholesale list only. There are no reasons why manufacturers shouldn't provide wholesale price lists for their customers (assuming their licensing agreements allow for the republication of copyrighted material). This will, of course, provide additional challenges for an industry that has been accustomed to using a single reference standard for all purchasing and sales transactions. But, in this age of computerization, these challenges can be managed.

However, other market considerations may not be so easily managed. It appears insurance companies will continue using the NAGS Benchmark Prices. Initial indications are that these various manufacturers price lists are intended to reach beyond the manufacturers' customers and into the retail market. "Cherry-picking" has also been raised as a concern by many trying to envision doing business in this new environment.

The next few months will prove very interesting yet again as this industry continues to struggle with their pricing issues. We are always looking for feedback from the market to help us determine if we are on the right track in the information services we provide to this industry. If anyone has a better idea of how we can approach these issues, please let us know. All constructive comments are welcomed.