Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

How often do you look at your car repair bill and understand all the costs?

How often do you look at all the numbers and marvel at just how expensive a new radiator might be?

At heart, though, do you merely look your car repair shop in the eye and trust that they -- or, indeed, the parts suppliers -- aren't laughing at how much you're prepared to pay?

I fear I'm in all three groupings here. I tend to cross my fingers that my car is reliable and that little will go wrong with it. (Naive, I know.)

A current court case, however, is offering a peek into the psychology of how manufacturers price spare parts.

As Reuters reports, several carmakers -- Jaguar/Land Rover, Peugeot and Renault among them -- have been accused of not focusing on how much margin they should to make on a spare part, but instead allegedly focusing on how much a naive customer might think it costs.

Ergo, the accusation goes, they have used very clever software that, in essence, suggests what sort of price they can get away with.

Which sometimes might be an enormously inflated number.

Some might consider that this is just normal business practice.

If carmakers think customers are prepared to pay inflated prices, then why not?

There's a kink here, however.

According to the plaintiff -- the man whose software was used by consultants Accenture to advise its carmaker clients -- the carmakers were very careful about those parts that might be the subject of extra scrutiny from insurance companies or specialist magazines.

You really don't want some sort of public scandal with these things, do you?

For its part, Accenture says the software was merely used between 2009 and 2015 to track down parts and have up-to-date information about availability.

The principle here, though is a difficult one.

Whether it's a restaurant, a bar or, especially, a luxury goods manufacturer what they charge reflects the brand aura far more than the cost of the raw materials.

It's a very thin line, however, between this and price gouging.

Of course, if there truly was subterfuge, it would surely take just one carmaker to expose it and embrace offering customers a fairer deal.

This doesn't appear to have happened. Which could lead some to suspect that all carmakers would prefer to offer inflated prices and may even be using similar software today.

There's also a far broader issue.

Increasingly, corporations are becoming fascinated with software that tells them how much a customer can afford.

Airlines, for example, are toying with the idea of charging their customers not according to where they're flying or even in what class, but according to how much the software thinks they're prepared to pay without thinking.

This, of course, means the concept of Caveat Emptor is pushed to sublime levels.

Whom can you trust these days? 

Oh, no one.

Published on: Jun 16, 2018