Not to offend but that arguement doesn't hold water. Some of your points are rather valid but not in this point.

I came from the Ford Focus crowd. We've had to fight tooth and nail for companies to produce products for the car from day one. To this day after almost 5 years of the car being available its still tough to get certain parts. But the parts we do get are still coming out at around HALF the cost of MINI parts.

Also you mention that these companies are small so the parts cost more to produce. Problem is that MOST small companies outsource their designs to other companies to be built or fabricated.

Sorry to say but alot of MINI owners are being gouged. Most companies know that the average MINI owner has a pretty high income. So they can get alot more for the parts and turn a much higher profit. Its a simple part of business, when you can, charge more. As long as MINI owners keep paying these incredible prices the companies will keep offering them.

Sorry, it just seemed like it had to be said....

 

well how about when there is low or no demand... the price would drop too.. when prices drop people buy... when prices rise suppliers supply(when there is alot of demand, they play with the prices slightly), complex I would say.
something to do with the law of demand and supply...
Yes they do intersect some where but it aint in the right spot right now

 

I'll be as honset as is humanly possible and just tell you that my best margins are 30%. That is by no means a gouge. I have some items with as little as 10% margin - and some of those are parts I make! I keep them low margin to try to make them more available.


Just thought I'd throw in some factual data

Hope that helps,
Randy

 

jesus christ.. i take back what i said!

say something and eveyrone jumps right onto the argument... im merely stating that it is MY perspective.. you have YOUR perspective... fine... why are you guys all complainin to me now? why not ask why the hell does mini madness think they can sell a full header for 1000 bucks? i dont work for madness...im like everyone always out to hunt a bargain, that's all

im not even an economic major.... so don't go jumping all over my arguemtn... it is merely my perspective...

 

FWIW, I was an economics major and I just have to say that what Randy and uae Mini are saying about how one runs a business is the way it generally works. Unless, you think you can invent something that nobody else is going to compete with you on. Build one and sell it for a million dollars.

Come on, these are small business, who do, in fact, outsource a lot of what they sell. They get charged X and then sell it for Y, hoping to make enough money to stay in business. Look if they overcharge, it won't be long before someone else comes in (could be the likes of jlm) and find a way to sell it less expensively. Great. That's America. Competition. Free market. You get it. If you don't like it don't buy it. Jeez. Modify a Honda. They have cheap aftermarket parts.

I, for one, am getting the header. Check my sig out. Do you think I'm going to worry about a few bucks, considering what I have into the car? The header is nearly the last piece in the puzzle for me. After the head, cam, intake manifold, CAI, wider throttle body, pulley, chip and exhaust. At that point, how my car breathes becomes a bit more important to its performance. A header was not one of my early mods.

And as for Miltek. well this will be a first. I'm tired of burned out cats. I am now on number two. In my posts here and on MINI2 I have never said a discouraging word about a product, but it's in my sig and it's going bye-bye. I'm sure they make a fine product. It's probably my setup that is causing overheated gas problems. So be it, straight pipe here I come.

I look forward to my new Madness header, instead of the melted rattling thing that's in there now.

 

I was actually going to throw in that you had some of the more reasonable prices for parts that you seem to have some control over its pricing on.

 

the best thing you can do for your header is to get it ceramic coated; lowers the surface temp by 200 degrees, reduces underhood temps, improves exhaust flow. costs about $250 for a primo job. the stuff is amazing. makes the polish job (and even the use of stainless) worth what it is worth; zippo. I went to HPC coatings and used the high rent turbo coat.
http://www.hpcoatings.com/hipercoat.htm


regarding markup; if a part wholesales for $100 and retails for $200, most retailers call that a 50% margin.

so a part wholesaling for $100 with a 30% margin would retail for $145

 

Agreed, John. I forgot to mention that besides getting the straight pipe as well as the cat option (to ahem utilize at strategic two year intervals ), I will also be getting the ceramic coating from Mini-Madness for $199 -- lifetime warranty.

I definetely agree about the underhood temps. We have a lot packed into a small space, with what I consider to be less than super air flows. One reason I'm getting the Mini-Madness oil cooler, also discussed in this thread. Besides lowering the oil temp, it should allow the coolant temp to drop also, by avoiding the double-pass. Will help at trackdays, for sure.

I know you and some others are concerned about things getting a little too cool for regular street driving in the winter, but we rarely go below freezing here in good old rainy Seattle and I will just change out my oil's viscosity, if needed. I guess I like the idea of starting out with lower temps and worrying about viscosity and possible thermostats, than the other way around.

Because the Madness oil cooler will have location points for both oil temp and pressure sensors where one should get an accuarate reading, I will be able to confidently monitor them. I am also going to put in an aftermarket water temp gauge to correctly monitor the coolant, since the stock gauge is almost a three-position gauge. Cold, fine and hot.

 

from what i have read, you need to keep those synthetic oils above 200-220 degrees to boil off water and other funk. Blasting down the highway at 80 in 6th gear with an unregulated oil cooler any time of year might be too cool.

 

Again, agreed. One reason I'm getting a "real" water temp gauge. As you mentioned earlier, if need be a Pegasus thermostat/Tee unit can be put in. Rather have to go up then down.

Planning on doing the One Lap Of America again. Same car. Durability and reliabiltiy great so far after 36,000 miles, the OLOA and about 20-25 trackdays. Knock on.... Want to keep things cool.

 

As much as I like choices, there really are too many MINI tuners and they need to consolidate. Let's face it 1-2 companies could make pulleys and we'd be set. No point in having the market fragmented to 5+ manufacturers. As new and great as they all are, if all of the tuners focused on making 2 types of pulleys (and of course having some input on new revisions) it would be much cheaper. Batches could me much larger and you could export them to foreign markets fairly easily. In fact, since they are fairly small and light, selling standardized parts to Europe to take advantage of the weak dollar would be super smart right now. Other parts could be done like this too. Think of how many different non HAI intakes there are out there that are in reality fairly similar. Every tuner seems to have their own. While JCW and Dinan will get a large share of the market, if there were 1-2 constantly improved batch-to-batch intakes retailers would do fairly well.

The big thing would be getting everyone to go along with it. Although the shops may not like it at first, if they do a joint venture to manufacture/design 1 standardized part among all of the say top 5-6 MINI tuners, they would be set. If this corporation was in NV or FL with lower taxes, they have all/most of the profit from the S-Corp be earned in NV/FL they could get around quite a bit of taxes I bet many of them pay and take home more or the same amount and charge significantly less (also remember unit costs are way down because larger batch sizes).

Once they do something like that they can pretty much lock out any small new competitor from the marketplace. Their unit costs and tax structure will be so low that they will be able to sell at a much lower cost and make the same profit. A new competitor will either have to source the parts from their joint venture OR they will have a much higher price for production meaning they will have higher prices. Option #1 there means they make money from the new entrants, so who cares? Option #2 means the new parts don't sell as fast because they have higher prices. While the new entrant might sell some, margins won't be that great and volume will be low because of the high price.

Let's also not forget these companies all need to market their parts. If you wanted to go after the European Market for the currency it would be much cheaper to do this as a group versus individually.

Case and point, look at alta and how many places sell their stuff. Look at how many people buy their stuff. If US manufacturing was centralized and they used their "local" and message board touch to sell to the US and combined marketing efforts to sell abroad, these companies would be set. They could earn the same, if not greater profits, sell stuff to us at reduced prices, AND GREATLY reduce R&D expenditures since you invent the pulley once, maybe make a few modifications for the next batch, but you don't have 10 people coming up with the same product. Bugs get worked out faster, reliability goes up, price goes down.

The entire reason I went into law school after finishing my MBA was because I want to consolidate markets like this in a few years.

BTW If those companies want to do this I'd be happy to get some non-disclosure agreements together first week in Jan and compile the data for you guys. My primary reason for doing this is to help build a resume in this area though, not to make cheaper parts for myself since my MINI is done being modded.

 

 

You may be right here, but there are a few points you miss. Large area consolodation of this could increase the overall "efficiency" of this market, but it's wayyyyyy early in the game (but you do see signs already, look at Helix/RDR!) for massive consolidation. Also, if designs were frozen, then centralized manufacturing could be done, and we'd all be better off (exept those that were making the other parts!) but many of the R&D efforts (that you seem to want to reduce) are really off-shoots of people persuing their hobby (driving fast with the Mini). the idea of Batch to Batch improvement is appealing in one sense, but it also means there's tons of support for different versions in the field, and this increases after sales support costs considerably. for some items, it might make sense, but there's so little to gain past the basic CAI idea (pending miracles from the M7 Air Gain System ) that doing ANY changes at all, other than to correct a massive screw up, is pretty much flushing money down the toilet.

Of course, this assumes that everyone involved doesn't want to run their own small business, and that gross profit is the driver, and there's no value to the autonomy that running ones own small shop.....

isn't the investment in a track car, the $ and time needed to test and improve on the basic design etc quite a barrier to market entry? True, lower manufacturing costs are always an INCREASE in the barrier to others, but they of themselves don't CREATE it.

This is basically true, but very incomplete. It's based on the idea that the sole barrier to entry is manufacturing costs. I don't think this is true, so this argument, while it CONTRIBUTES to a description of this markets dynamics, it's far from complete. So incomplete, that I would hazard to say that other drivers are much stronger in small, early markets.

OH BOY!!!! The number of companies that FAIL in the transition from manufacturer with distribution channels to direct end user sales is HUGE!

1) Each customer has the potential to add to your service load, even after they've stopped spending money. The service load is acretive with volume sold. Contrast this with distribution channels, where the load is mostly based on the number of channels, and weakly coupled to volume. This gives companies a much better abillity to plan, and keeps the support staff small and the manufacturing staff large. This is good for a company that makes stuff. :smile:

2) Distribution channels can be a local presence without having to pay rent in some building. This means you can have the low overhead of centralized manufacturing, with the market reach of local presence. Loosing this takes a lot of marketing $ to replace. There go some of those NV tax advantages....

3) End user sales locations can sell all facets of the solution that the customer needs, while each manufacturer can specialize. This is why Edelbrock doesn't make in-car video system, but you can buy both a Kragen!

The number of differences between the two cases are huge!

There is couple of other points that you miss here:

The Mini is a small marketplace. Total number of cars is really a low number. The total revenue may not cover the cost of consolidation enough to even make the time to payback calculation worth doing.

Market evolution can happen in several ways, consolidation like Helix/RDR, or a bmw shop could make Mini parts, like Dinan. There goes some of the cost barrier of volume manufacturing because a lot (but not all) of the infrastructure is in place. Also, the little tuner shops can act a prototype houses, and sell the design, or loose the revenue when the product is mature, and replace the revenue stream with other stuff ( look how a lot of the tuners are moving into polished intakes, when that wasn't common a while ago).

Last but not least, the small shops may LIKE they way they are. If they can stave off some forces of market consolidation, and are willing to pay the premium of reduced profits to do so, I think the whole market is BETTER servered than consolidation into the Mini-Borg

Or not......

 

Hi d6-mcs,

Just like to know when were you down to George place and tried out his twincharged mini?How fast does it really shoot?Would it be better than Honda Civic vtech with mods on?What would you think it will prove for the 0-400m drag result?

Do you ever have the chance to try on the mini with the 23psi Rotrex supercharger?George should 2 different mini,1 with twincharge and the other with Rotrex supercharger.

Do you know anything about the one with the Rotrex?Does George mention anything about it?

Why I"m asking you so is that I'm buying the Rotrex Supercharger kit which would generate 23psi instead of the twincharge 25psi.George told me he have issues with the twincharge mini.

Hope you are able to help me with some infos.I believe you should know how much will this kind of kit gonna cost.To me engine durability,performance and proven result are the primary factors.

Till then and hope to hear from you soon.

Thankyou.

Peter.

 

Ditto!

 

Wow excellent response!

I would say this is true. I probably failed to communicate this effectively. What I meant by changes in a CAI would be small changes in design things like changing colors, engraving, etc. I'm in total agreement that CAI and pulley changes are minimal at this point. Most you could do is improve stuff like instructions or change colors of the heat shields, pullies, installation hardware, etc. These are the PERFECT things for mass production though.

If by referring to different versions in the field you mean the past fragmented parts everyone put out then that would have to be handled by each company individually that sold those parts. If you mean batch to batch variations of a standardized part, the idea is that they are VERY low if they exist at all. Again, this is really directed mostly for making parts like the pulleys that are pretty standard and that aren't likely to change.

This misses my point slightly. I'm not saying that you consolidate the companies. Instead, I am talking about creating a new shared entity that manufactures the parts for everyone. One thing about this business is that it depends greatly on customer service and location. Being in Los Angeles I might be more willing to buy a part Steve's auto clinic reccommends and is about to install. Likewise, if I'm going to a Randy pulley party, I'm likely to purchase from him. I'm not saying that one gets rid of the businesses, what I'm suggesting is a VISAesque move (limited in scope of course)where the backend, in this case manufacturing, is offloaded to a jointly owned (by the founding participating shops) entity that lowers unit costs for everyone. The current companies would stay, they would just choose a design and outsource the manufacturing of the standardize part to their jointly owned company.

I know the joys of owning a small business. In fact I sold my first one when I was 17. I'm not asking people to get rid of that, just streamline the backend operations.

If I made you a duracell battery 100% identical except for markings (patent issues aside) and sold it to you for $10 at circut city would you buy it? Let's say the only reason that mine costs $10 is because I don't have the economies of scale that duracell does. If everyone is making small batches of say CAI's, the same size as a new entrant might, would one set of competitors using economies of scale not create a barrier because before a new competitor would be at a disadvantage now where they would have been on equal footing. If you are able to saturate the market so your product becomes standard, a new competitor might never be able to gain enough share alone to make this money back if they attempt running a large batch. This may be a wording thing but I think we are in agreement that it would be more difficult for a new entrant to hit the market with these standardized products.

I understand where you are coming from here. Randy said his average margin is about 30%. What if he could lower his taxes by another 15% (I'm assuming he has an S corp or something with pass-through). It's like adding another what 4.5-5% to his margins. This is because if they all used transfer pricing to "earn" in different tax jurisdictions, they can create income that is taxed less. A penny saved is two pennies earned. Not bad since it is free money to him. With higher margins from tax advantages, PLUS lower costs of the item, the companies may be able to price new competition out of the marketplace. With companies like Alta, Dinan, and JC, the market wouldn't be a monopoly if they did this.

I'm going to have to parse this next section a bit.

I agree, but I think this might stem from the misunderstanding where you thought that I wanted to consolidate the companies rather than the manufacturing. If you have one company just pumping out the product with others selling you aren't changing the sales model, especially if your new manufacturing is owned by you. You are just standardizing the manufactuiring of what has become standard product.

I think this one was another one caught in the misunderstanding of the structure of my proposal. With the existing companies remaining, you still have the local reach. Since this would be a back-end thing outsourcing to the conglomerate that you are a part of, this isn't an issue. In fact, it would allow companies to liquidate some unnecessary tooling, freeing up shop space (since you don't need manufacturing tools anymore at each location) for either adding more area for servicing the cars OR even if it lets a company use space as storeage without needing to rent a place that is still savings. I digress, there may be some tooling required at the new manufacturing operation, and there are costs associated with that, however it tends to be terribly expensive to have idle manufacturing equipment to only run small batches. If people are already outsourcing manufacturing of a part then you just get a discount from asking a shop to run a larger batch size.

So you get to lower requirements for unneeded space/ equipment for the manufacutring, plus it is conceivable that you end up with less inventory on some items. Let's say a company does batches of 50 right now. If 6 companies ran batches together they could run batches of 240, still get huge discounts from scale, and end up with less inventory. This lowers inventory costs. Combine these two and you have lowered the amount of stagnant cash sitting in your business. Heck, you don't even have to insure all of the machines that aren't there.

Very true, but again, the current companies are free to make new solutions. This is just standardizing the manufaturing of a standard product. I think this arises from the beaten to death point that there was a misunderstanding of what I meant.

While the MINI may be a "small" marketplace, my other car BMW sold about 2,700 of them with 2 different engines over four model years. MINI USA sells 30k+ a year, just in the US. Isn't worldwide total production now well over 500k cars? I think so. Where this idea makes a lot of money is by exploiting the weakness of the dollar (in the short term). If you went to european tuners and told them that you could make pulleys etc cheaper for them right now because the dollar is weak and you are doing larger batches, you are pretty darn set. These new retailers increase your volume for free, giving an overall lower unit cost, and you can get some margin out of them beyond that because their currency is valuable.

The sad thing is that I've had my BMW for 5 years now, I have a Dinan supercharger, ground control/ tc kline suspension, stereo I did custom, and turner motorsports brakes, and some doo-dads from other vendors. So I'm decently aware of the aftermarket for the BMW, and I can name more MINI tuner shops readily off the top of my head than I can BMW tuners. BMW sells multiples of MINI's total sales. This tends to lead me to believe that there is too much fragmentation here.

While you may be right about the infrastructure being there, what happens to those you did not list? Are they not at a disadvantage on standardized products versus the larger players? (Hint they would be but I don't think the other players have hit that high of scale yet EXCEPT for Alta.] Next, what if this organization started making BMW parts? What if the new product lifecycle was each of the current shops coordinates R&D so that each tuner is doing their specialty? Once a product hits maturity or even first production run status, what if it is "sold" to the new manufacturing organization?

Again, there is no point in getting rid of the current shop infrastructure. I doubt any of the people we see on the boards makes 50 pulleys and on #49 are excited that they got to make that one. Maybe the prototype, maybe the first few, repetitive mass production... I doubt it.




To be quite honest, I don't know if this would work. I have an idea of what to look for. I have an idea of what the final manufacturing (ONLY) organization might look like and where the benefits might be seen. I also have a guess as to why this has not happened already. My first guess would be tradition because this is the way things have been and nobody rethought it. My second guess is that since all of the would be partners in the joint venture are currently competitors, they would not want to share this important information with each other, and rightly so. That is why I proposed looking at the numbers under NDAs (so I will not disclose without consent), and seeing if this would work. It might be that the understandable unwillingness to share with competitors is blocking a would be awesome move for everyone. I can't imagine going into competition with these MINI tuners so I don't pose the same threat that the competition does.

Overall though, thanks for the thoughtful response Dr Obnxs. I'm guessing from your Woodside location and your response that you work on Sandhill or in a SV tech company... anywhere close

 

Not sure this is true. This is only true for comodity components, and it's already happening! Webb doesn't MAKE a pully. But I can also buy a head for my 5.0 from more than one company, and that's a mature market. Heck, I can even buy an alternator pully from more than one company, talk about a comodity!

There are places where your model works. I just don't think this is one of them.

Matt

 

Well, I could easily lower his taxes by 30% but that's another issue

 

Was the header every dyno'd and posted on NAM?

 

How does this unit stack up against the one Moss used to sell for the price?

I've always been interested in the unit Moss sold but could never find anyone who had one and how they felt about it. Anyone have either of these installed yet?

Impressions?

 

Just do like the majority of aftermarket manufacturers do. Buy each of the best of the best products, send them to China and sell copies. $1000 header is now $250 retail with much more than a 30% margin.

Seriously having worked in the automotive aftermarket at the W/D level the average mark up going to the parts stores was 100% +. That means our cost was $50 and sold to the parts stores for $100 who then marks it up to the end users.

Sorry to say that if a manufacturer is only getting a 30% gross mark up they won't be around long.

Most perfromance parts for "niche" vehicles are developed by enthusiasts with a passion for more power/speed. Once they come up with a working product (ie pulley) they will farm out the manufacturing to companies capable of producing the parts. Volume starts low (expensive) and gradually increases as the product gets recognition. If the parts gain wide spread notoriety a large well known aftermarket manufacturer may start their own version. Look how Edelbrock has broadened their line of parts.

But sad to say many take manufacturing off shore to increase profits.

 

Maybe the market hasn't developed yet...maybe buyers don't know any better - but the build quality of this header looks rather poor for the pricetag. The merge looks horrible, like it was stamped by a machine. With no visible welds, how are the pieces even attached?

Admittedly, I'm coming from hondas where there are tons of options, including many very skilled builders producing custom, hand-built pieces. Yes, the cat adds cost, but also brings up another issue... where did this cat come from? what are the flow numbers for it? how long will it last? Were I local to any of the better honda header fabricators, I would gladly donate my car for testing, just to get something better onto the market. I mean, gains over stock are easy. Significant gains over the the mid-level products require significantly more skill and I would be genuinely surprised if this unit brought much to the table other than a shiny finish. The market needs to demand better and quit purchasing items just because your favorite store offers it.
-------

Regarding the oil cooler... nice piece, well thought-out. I wish they would picture the hoses, ends, mounting brackets, etc. supplied with it. Again, seems a little expensive, but I suppose you're paying for the engineering that went into the adapter block. Were they to offer the block by itself, I would choose that route, simply because I would want a larger cooler. For the track, it seems a little small.

 

I have the first Moss unit put out and about 25k miles on it so far. The fit and finish was fine then and still is now. I was able to cut the last section and have the stock cat welded in as well so the car is closer to " legal " for CA. As for performance increase any header by itself is not going to be noticable but as you add more to the intake and exhaust track it becomes more worth while with each additional mod. I beleive they are selling it now around $ 600 which seems like a decent deal compared to what else is out there.
Randy
www.m7tuning.com

 

The oil cooler is nice, but $599 is a bit of a ripoff when for $259.95 you can get the Cobalt oil cooler from MossMini that also converts your filter to a spin-on filter that makes life easier. I'm not sure the size of the cobalt, but it is definitely also much bigger than stock.

 

IMO, the cobalt cooler isn't a comparable product.




The cooler alone is miles behind the Setrab unit in term of quality and efficiency. I won't comment on the lines since Madness hasn't pictured theirs yet.

Anyone who has pieced together a high-quality cooler setup before knows that hoses and fittings get expensive quick. No, you don't necessarily need top of the line fittings (such as Aeroquip or Earls) but they do add value to the overall setup.

I've already stated that the madness kit seems overpriced, but from what I can see of the above picture, the moss kit is as well, if not moreso. If all you're after is the cheapest solution, you could accomplish that by visiting a race shop - such as http://www.racerpartswholesale.com/ - and putting together higher quality items for less money.

A "kit" is just more convenient - but only worthwhile if that convenience comes at a decent price. IMO, the madness kit is an exception because their distribution block brings a new feature to the table that may be unavailable elsewhere.