In order to bring our benchmark pricing into line with current prevailing market pricing as determined by NAGS, the January adjustment will result in a significant overall reduction in the benchmark retail list prices currently published in the NAGS print and electronic database products. To assist those in the industry seeking to prepare for the upcoming change, NAGS is making two preview packages available. The first preview, which is based on the May 2004 publication currently in use, will be distributed in August. The second will be distributed in October/November and will be based on the September 2004 release.
The preview packages are designed to give industry constituents information to help them understand the magnitude of the changes as they relate to their organization. As a result of the NAGS rebalancing, buyers and sellers will need to review the terms of their trading agreements and make such adjustments as they deem necessary to account for the new benchmark price levels. To assist trading partners in their analysis, each package will include a printed booklet and an electronic file describing the benchmark price change for the most commonly sold parts. Each part listing will include part number, current benchmark price, rebalanced benchmark price, percentage change in benchmark price, adhesive quantity and labor hours.
The need for rebalancing has stemmed from the benchmark pricing methodology used by NAGS prior to May 2002. The old methodology was based on manufacturer 'truck-load' list prices. Over time, this approach resulted in an artificially inflated benchmark price as 'truck-load' prices became less and less reflective of actual retail acquisition costs due to factors such as increasing manufacturer discounts and net priced parts.
In May 2002, NAGS switched to a net acquisition cost methodology to more accurately reflect market price fluctuations in the retail acquisition cost of glass parts. During this period, the NAGS published benchmark has more accurately tracked actual market price fluctuations among retail buyers remaining flat on a weighted average basis from May 2002 through May 2004. Since the new methodology has successfully eliminated the artificial inflation of the past, the final step is to reset the NAGS benchmark to more representative market levels.