Trust/Greddy Japan files for bankruptcy - Page 2
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This is a discussion on Trust/Greddy Japan files for bankruptcy within the News and Announcements forums, part of the Community - Meet other Enthusiasts category; oem vs aftermarket... the biggest factor is economy of scale. an oem strut spreads the r&d & mfg/transportation/ etc over ...

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    oem vs aftermarket... the biggest factor is economy of scale. an oem strut spreads the r&d & mfg/transportation/ etc over a much larger population. think of it this way: every imprezza has 4 oem struts on it out the door. how many imprezzas will have 4 of them replaced with something from the performance aftermarket? most replacements will be another oem unit.

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    It IS a sad day. Like Verdugo said, lowering prices wont help. More than likely, it'll compound the problem, given the amount of cash dumped into R+D, materials and production of the parts.

    Yeah, Greddy'll still be around. In fact, I bet they held Trust up for a while, given that the yen is worth MUCH less than the dollar. But without the support from Trust, and the aforementioned lack of involvement and crummy customer support, my questions is how long will GReddy stay afloat?

    I think there were a couple signs that showed this coming though. I remember either last year or the year before, GReddy had a "fire sale" at their warehouse in California, even selling one-off and out-of-production parts off their shelves. I cant remember if it was annual (Which I doubt) or if it was spontanious, but it really made me curious...

    It'd be awesome if someone bought out Trust to save them..

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    Lowering prices WILL help (whatever it's worth).... Work on my example above... Many of you will not remember the late 80's (ok, 89-95) Sound market went to crap right after this, you couldn't touch a nice deck for less than 600.00, now , decent ones are around 200.00-300.00, GReddy is doing the same thing HKS is doing.... poking ppl in the arse triple what the cost AND R&D is. If I can make an exhaust to maximize flow under my car for close to 200.00, then why is HKS,Greddy charging 700.00 EACH time??? The same goes for these pro tuners. Get my car tuned @ MZM in Austin, TX was 400.00 over a yr ago. NOW it's 550.00.... for what ? An hour and a half's worth of work ?

    It's going on ALL over this country. Look at your insurance rates, just because some 16 year old (stereotype) flipped a WRX 4 years ago, is no reason to jack MY rates up now.

    I do agree, you all know how to debate... Thanks for the chats.
    Last edited by JUSTINSNUTSWINGER; 09-16-2008 at 04:03 AM.
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    Quote Originally Posted by pzr2874 View Post
    Lowering prices WILL help (whatever it's worth).... Work on my example above... Many of you will not remember the late 80's (ok, 89-95) Sound market went to crap right after this, you couldn't touch a nice deck for less than 600.00, now , decent ones are around 200.00-300.00, GReddy is doing the same thing HKS is doing.... poking ppl in the arse triple what the cost AND R&D is. If I can make an exhaust to maximize flow under my car for close to 200.00, then why is HKS,Greddy charging 700.00 EACH time??? The same goes for these pro tuners. Get my car tuned @ MZM in Austin, TX was 400.00 over a yr ago. NOW it's 550.00.... for what ? An hour and a half's worth of work ?

    It's going on ALL over this country. Look at your insurance rates, just because some 16 year old (stereotype) flipped a WRX 4 years ago, is no reason to jack MY rates up now.

    I do agree, you all know how to debate... Thanks for the chats.
    I can understand being frustrated with rising prices, especially with tunes. Tunes aren't affected by the cost of raw materials, shipping costs, customs fees, or things of that nature. However, let's take a look at Greddy and HKS since you used them as an example.

    The HKS Carbon Ti catback has a retail price of $895. It had this same retail price back in 2002, and the price didn't go down, nor went up. Add in the rising price of aluminum, carbon fiber, and oil (for shipping) and one would expect this price to go up, but it didn't. Thus, HKS was okay with making less proft margin on their exhaust despite their cost of manufacturing and shipping going up quite a bit. Moreover, they haven't changed their discount level to their dealers either, so dealers are still able to sell this exhaust for less than $895.

    Greddy on the other hand, has also kept prices the same, however they cut dealer discounts, in the name of curbing Internet price wars. Thus, a dealer who used to get 35% off retail would then only get 20% off retail. By doing that, in essence all selling prices go up, but they don't go higher than than MSRP, plus dealers can no longer ***** out Greddy's products. Many people associated this with Greddy pricing going up, but in reality it really didn't. In fact, the only real price increase Greddy's made over the past 2 years has been maybe $10 or $20 to help account for the higher shipping costs from Japan.

    Now, this issue with price whoring seems to be something that no one (not even Greddy) has been willing to mention as part of their demise. Why? Because it alienates their dealers and their customers. Dealers don't want to be called out for whoring out prices, and consumers don't want to be called cheapasses either. This is a problem that Greddy had way before there was any sign of financial crisis, by the pure and simple fact that they did not enforce any type of Minimum Advertised Price (MAP) policy on their dealers. Please don't get this confused with price fixing...price fixing is illegal and by law, it's defined as a company (or the government) fixing a sale price on a product or service, with no freedom of selling higher or lower than that price. MAP only refers to advertised pricing, whether it's on a forum sale, on a website, on eBay, or in a print ad. Many companies are very strict on MAP policies, including Cobb Tuning, Kartboy, and AEM...and by them staying strict on it, the value of their product stays consistent and dealers do not ***** out their products, which is what has plagued Greddy for quite a long time.

    Finally, I don't believe it's a fair to compare a $200 exhaust that you fabricated yourself to an exhaust from Greddy or HKS. You 1) have the know-how to fabricate it yourself and didn't have to pay someone to do it, 2) don't have to pay for distribution of your exhaust worldwide (which includes shipping, packaging, and customs fees), 3) you didn't have to pay for marketing the exhaust, 4) you don't have to pay for mass production of the exhaust, and 5) you probably didn't come up with several different designs and test all of them to figure out which either flowed the best or gave the best balance of flow, sound, and looks. But, let's say that you take all of these into account and maybe (hypothetically speaking) the final cost with everything above included comes to $450. Is it fair for a business, no matter who big or small their are, to sell this exhaust for say, $500 MSRP? Or maybe even $550? That leaves absolutely no room for any wholesale dealers, so it'd be direct from the company, and only direct from the company. Put it together with an average of $50 shipping for a full catback exhaust, and you're at say $600 total. Now, let's say you want to give enough room to do wholesale, since it's hard for a company to do all of their sales without some type of distribution. In order to give a wholesale company even 10% margin and for you to make 20%, you'll need to raise the MSRP to about $650. But wait! The Greddy Ti-C catback has an MSRP of $635, and the HKS Hi-Power has an MSRP of $625!

    Anyway, the exact pricing to the cent isn't the point. The point is...costs go up very fast once you start aiming at a global market. If you want to make your own exhaust to save money out of your own pocket, more power to you, but it just isn't fair to compare it to a business that has overhead, shipping, materials, and marketing costs to account for. After all, your mom can knit you a sweater for free, but you're not going to be able to sell that same sweater without a lot of added costs involved.

    Since we're on the subject of exhaust pricing, here's some more food for thought. People balk at the price of Greddy, HKS, or any other JDM exhaust, but the same people who complain about "paying for JDM bling" have no problem paying $675 + shipping for a Cobb Tuning catback. It's not like the welds and finish are 10 times better on the Cobb exhaust compared to the "JDM bling" exhausts. In fact, often times I've seen better welds on the Chinese-made Invidia exhausts than on Cobb's or any of the JDM exhausts. Thus, what gives here?
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    Another thing I forgot to mention since you mentioned the car audio market... let's not forget that during the time that you mention (89-95), we saw a HUGE step forward in computers and other electronic devices, which definitely includes car audio. CD players used to be stupid expensive, but as companies were able to make technology cheaper and smaller, costs went down. Hell, the early 90s was like the pinnacle of the Super Nintendo, and look where we are now with video games. While this same technological leap has helped streamline the R&D and manufacturing processes, raw materials, distribution, marketing, have all either stayed the same or gone up significantly since then. On top of that, you still have to pay for the technology to streamline the process too, so there's either an added or an offset cost to technological steps forward.

    Either way, you can't say that all of the car audio companies just decided to drop prices because they felt like it. They dropped prices because their costs went down, which isn't necessarily the case with most car parts.
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    OK Armin I'd like to address a few things in your debate breakdown thingymabobber.

    * HKS, Greddy, Cobb Tuning, may do their R&D, but they all send their stuff to China/Taiwan to be manufactured. Cobb started very recently ~1 year or so ago which is why you saw the sudden weld quality drop. This makes labor super super cheap because of their minimum wage and labor laws.

    * These systems once designed cost at most $70 a piece to manufacture and thats being generous.

    * To ship a container of crap (about 50 exhausts) over the water is about $450 to a commercial carrier on the slow boat a year ago when I checked. So ~$9 an exhaust shipped on the slow boat (Yes I know airmail is ~$250 a piece but I highly doubt a company airmails every single exhaust. no way)

    * Lets say pretty labels and boxes cost $5 each cause they buy so many.

    * On the design front lets face it...HKS, Greddy, Bobs exhaust does not reinvent the wheel every time. Yes they minimize bends and might make a few quick prototypes (with a cheap crush bender) and test fitment and mufflers before sending the CNC CAD file over the water. They do not reinvent and redesign the muffler every single time, hell most of them use OTS muffler carcuses from their exhaust supplier in indoChina with a fancy name stamped on it. Don't believe me? Goto SEMA and see for yourself. At most lets say design costs $2000, but they plan on making 2,000 units which equals ~ $1 a muffler. Some models may be higher, some may not need any designing. For example I highly doubt they redesigned the Greddy Catback for every year between 2002-2007 to fit the Impreza. But I do bet they sold way way more than 2000 units, and face it their design on that model is not ground breakingly complex by any means.

    * Marketing varies, lets say $3 an exhaust.

    That puts the total at ~$88 not counting power to keep the lights on, or shipping it to the dealer at his expense. But I'll play lets say that between the customer service department, keeping the lights on and receptionist it costs another $88. So now your catback is $176, add 25% profit = ~$220 shipped to the Greddy authorized dealer. So now Anything between $635 and $220 is either Greddy's gravy or the dealers gravy. Now it could be that Greddy enforces a policy of 20% only discount to dealers, in which case the rest is their gravy.

    Their ultimate demise in my mind was their lack of innovation in an ever changing market. Its the same old story. A young company builds its way up to the top on innovative ideas, great service and a good bottom line. Company gets fat and lazy; enter competition, lack of innovation, no rainy day fund, a declining market and bankruptcy results.

    Nothing new and It will continue to occur long after you and I are gone.
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    Quote Originally Posted by 06wrx4me View Post
    OK Armin I'd like to address a few things in your debate breakdown thingymabobber.

    * HKS, Greddy, Cobb Tuning, may do their R&D, but they all send their stuff to China/Taiwan to be manufactured. Cobb started very recently ~1 year or so ago which is why you saw the sudden weld quality drop. This makes labor super super cheap because of their minimum wage and labor laws.
    I know that this is certainly the case with some of their products, such as their suspension...but I don't think that's quite the case with others. Correct me if I'm wrong, but technically it would be illegal for Greddy to stamp "Made in Japan" on their exhaust if it was indeed made in China/Taiwan. If that's true, then I suppose every Greddy exhaust I've seen has been breaking the law.

    Quote Originally Posted by 06wrx4me View Post
    * These systems once designed cost at most $70 a piece to manufacture and thats being generous.

    * To ship a container of crap (about 50 exhausts) over the water is about $450 to a commercial carrier on the slow boat a year ago when I checked. So ~$9 an exhaust shipped on the slow boat (Yes I know airmail is ~$250 a piece but I highly doubt a company airmails every single exhaust. no way)

    * Lets say pretty labels and boxes cost $5 each cause they buy so many.
    I've had a lot of experience with shipping and manufacturing recently due to some of the things we're involved in, such as Do-Luck products. I've seen the cost of manufacturing of an exhaust made in China/Taiwan to be as high as $300-400 before shipping. Maybe that manufacturing company is ripping people off, I don't know...but that just doesn't match up with what I've seen on my side of the industry.

    As far as shipping goes, it seems to vary. We shipped a bunch of Do-Luck stuff earlier this year on the slow boat and it was easily around $500 for not even a quarter the size of a full container. Let's not forget shipping within the country too. On average, a catback exhaust will cost around $50 to ship anywhere in the lower 48 states.

    Quote Originally Posted by 06wrx4me View Post

    * On the design front lets face it...HKS, Greddy, Bobs exhaust does not reinvent the wheel every time. Yes they minimize bends and might make a few quick prototypes (with a cheap crush bender) and test fitment and mufflers before sending the CNC CAD file over the water. They do not reinvent and redesign the muffler every single time, hell most of them use OTS muffler carcuses from their exhaust supplier in indoChina with a fancy name stamped on it. Don't believe me? Goto SEMA and see for yourself. At most lets say design costs $2000, but they plan on making 2,000 units which equals ~ $1 a muffler. Some models may be higher, some may not need any designing. For example I highly doubt they redesigned the Greddy Catback for every year between 2002-2007 to fit the Impreza. But I do bet they sold way way more than 2000 units, and face it their design on that model is not ground breakingly complex by any means.
    I agree, they don't have to reinvent the wheel, but the overall cost of manufacturing, especially when it comes to a multitude of different vehicles, is where that cost is significantly higher for a larger company than Bob in his basement. A good company will take the time to R&D each exhaust per application to ensure it provides the gains they want, and that isn't cheap...but don't mistake that for me saying that Greddy or HKS do that either. Not everyone is like StopTech in that sense

    Quote Originally Posted by 06wrx4me View Post
    * Marketing varies, lets say $3 an exhaust.
    Marketing isn't going to be as cheap as that sounds, especially good marketing. Magazine ads for example are nowhere near cheap. A tiny ad in the back of D-Sport Magazine costs $375 per issue...that's about $4500 per year. That 4-color, full 1-page ad in Modified Mag costs $8450 per issue. That number's straight out of the Primedia 2008 Media Kit. The Internet is by far the cheapest form of advertising for any business, but a company will not be able to get as large as Greddy or HKS on Internet marketing alone.

    Quote Originally Posted by 06wrx4me View Post
    Their ultimate demise in my mind was their lack of innovation in an ever changing market. Its the same old story. A young company builds its way up to the top on innovative ideas, great service and a good bottom line, gets fat, enter competition, lack of innovation and bankruptcy results.

    It will continue to occur long after you and I are gone.
    This, I completely agree with. It's not a matter of lowering prices or blaming Chinese knock-offs...it's a matter of offering a product that sets itself apart from the others out there. Let's look at Cobb's Accessport for example...when it first came out, the TurboXS UTEC was king ****...but the majority of the people out there didn't want to do their own tuning, and were content with the TurboXS base maps. Enter the Accessport...comes with basemaps to fill the needs of the lowest common denominator, but yet allows for a professional tuner to tune the car for a custom setup as well. Since it's a reflash device rather than a piggyback, it gave better, consistent resolution and results, and it was priced significantly cheaper too. Few years later and look...the Accessport is the de facto engine management solution to suit the needs of the majority of the Subaru enthusiasts out there.

    Nevertheless, Greddy's demise is still a sign of the times we live in today. Consumers want to spend less money, the economy as a whole has less money than it did previously, but at the same time, many people are willing to give up innovation or a higher quality product to spend this less amount of money too. It's up to the companies in this industry to really set themselves apart from their competitors, but once their competitors knock-off these innovations or high quality products (such as Agency Power vs. Kartboy), there's less room to spend for true innovation and high quality. It's a viscious circle, really.
    Last edited by Verdugo; 09-16-2008 at 03:32 PM.
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    Do-Luck ...... on Verdugo's avatar ?

    I know you aren't saying that the "lesser known" names don't make better products ?

    Kartboy makes better products than almost any I can think of. The word knock-off is VERY harsh for "smaller" companies. Here's one..... Infinity is a big name in car audio..... I wouldn't piss on it if it was on fire. Pioneer is the same garbage, I even have a head unit of Pioneer... only reason I bought it was because of the price (only reason). Kartboy makes THE best shifter and bushings I have seen aftermarket in 15 years.
    Last edited by JUSTINSNUTSWINGER; 09-22-2008 at 03:41 PM.
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    Quote Originally Posted by pzr2874 View Post
    Do-Luck ...... on Verdugo's avatar ?

    I know you aren't saying that the "lesser known" names don't make better products ?

    Kartboy makes better products than almost any I can think of. The word knock-off is VERY harsh for "smaller" companies. Here's one..... Infinity is a big name in car audio..... I wouldn't piss on it if it was on fire. Pioneer is the same garbage, I even have a head unit of Pioneer... only reason I bought it was because of the price (only reason). Kartboy makes THE best shifter and bushings I have seen aftermarket in 15 years.
    I agree with you on Kartboy, that's why they were knocked off by Agency Power, which uses crappier material and has even been known to break off in some circumstances. Kartboy FTW! But undoubtedly, Kartboy's seen a hit on sales because people are buying the crappy Agency Power knockoffs for cheaper prices
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    and because some clowns tout it to be overpriced garbage brah!

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    Quote Originally Posted by BrianH View Post
    and because some clowns tout it to be overpriced garbage brah!
    Yeah, those clowns that work at Agency Power
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    Never had anything Agency. Was considering their headers.... but now they can bow down... Thank you for opening up THAT can of worms for me on Agency.
    What's overpriced ? Kartboy ? Not even close IMHO.

    Verdugo, is yur front piece Do-Luck ? I like that.
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    Quote Originally Posted by pzr2874 View Post
    Never had anything Agency. Was considering their headers.... but now they can bow down... Thank you for opening up THAT can of worms for me on Agency.
    What's overpriced ? Kartboy ? Not even close IMHO.

    Verdugo, is yur front piece Do-Luck ? I like that.
    Agency Power told Tom at Kartboy that his short shifters were "overpriced garbage" but then went and knocked off his design and used cheaper materials.

    And yep, I have the full Do-Luck kit
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    How do you know about the AP issue w/Kartboy? Should start a Agency hater thread.

    I shift HARD and have had no problems w/my KB. Never heard of them having any issues.
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