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Pac Man Fever

Pricing pressures in the automotive parts business are so bad that prices have remained essentially unchanged since 1982.

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 I grew up during the Golden Age of video games. Games like Pac Man, Space Invaders, Galaga and Donkey Kong were pretty much all I thought about as a kid.

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My friends, Dave and Brett, and I just couldnt resist the electronic lure of the conquest of space, the saving of a damsel in distress from Donkey Kongs rolling barrels or Defenders shoot-em-up battles. As the song of the time went, we really did have Pac Man Fever.

Each game cost a lone quarter. And so we hoarded them. A dollar bill was even better since the arcade near us would give out five tokens for a dollar.

The other day, I was at a local restaurant that had a small video game arcade attached to it. I wandered in, mostly because I noticed that they had an old Ms. Pac Man game in there. As I recall, I generally stunk at Ms. Pac Man, but I wanted to try my rusty skills one more time. I stuck my hand in my pocket to see if I had a quarter. And sure enough, I did.

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But wait a minute. Ms. Pac Man is now 50 cents. A whole half dollar?! The price has doubled! As I looked around at the other, newer games in the room, I noticed that it was impossible to play any of the games for less than 50 cents. Some were even a buck. Well, kudos to the gaming industry. In the span of 20 years, the gaming industry has managed to move the needle 100 percent, doubling the price people are willing to pay to play, even on games for which I happily paid 25 cents back in 81. Come to think of it, just about everything nowadays is more expensive. Thats just how the world works.

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Not, however, in the automotive parts industry.

Last year at the AAPEX show I was having dinner with a store manager. During the meal we were talking about the state of the industry, and we got on the topic of price. He mentioned to me that the price he sells spark plugs at hasnt changed in 15 years. But its not just on spark plugs. This is backed up by the sad findings of an analysis conducted by the Motor & Equipment Manufacturers Association (MEMA). According to Frank Hampshire, MEMAs research analyst, prices for automotive parts have not significantly changed since the days when I was paying 25 cents to play Centipede.

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In an analysis of the Consumer Price Index (CPI), which appears in MEMAs bimonthly newsletter Market Analysis, the index shows that prices for auto parts have grown very little in the 22 years following the resetting of the CPI in 1982.

Basically, prices for motor vehicle parts and equipment have risen at a rate far lower than inflation and most other consumer products, including video games. While this may be good for the consumer, it is very unhealthy for the financial status of the industry.

I agree with MEMAs Paul Foley when he says, For too long, the industry has concentrated its marketing on being the lowest cost supplier.

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Sometimes being the lowest cost supplier does more harm than good.

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