Lets get rid of car dealerships

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Browser
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Lets get rid of car dealerships

Post by Browser » Mon Jun 10, 2013 9:57 am

Recently, I've been new car shopping, spending quite of bit of time at it. As part of the process, I began getting on dealer websites. Here in Phoenix, you can browse the complete inventory of available cars, you can get immediate discount pricing, you can negotiate if you want, and you could even purchase the vehicle. I began to realize how extensive the internet sales sector for cars has become, at least in this locale. Like everyone else, I hate going to the dealership and dealing with salespeople. As far as I'm concerned, they don't add anything useful to the process, except being a necessary evil to examine the car physically and take a test drive. Because I've already done the research online, I usually know more about the car I'm looking at that the salesperson du jour does anyway.

When I'm ready to buy, I'll do it over the internet with the dealer. I don't see why we can't just move to an Amazon.com opt for selling cars, which would allow deep discount pricing. There would still be physical lots where "Amazon" buyers could go to get "hands on" with vehicles, staffed by a cadre of drones whose only function is to show you the cars and take you on test drives. All the rest of it can be done online.

I'm waiting for the first car manufacturer or car dealer to explicitly start offering this kind of car-buying option to internet-savvy car buyers, so you can have a "salesperson-free" experience. There will always be a group of buyers who need to deal with salespeople because they need the handholding, so there will need to be some "dealerships" with a cadre of salespeople in some form to deal with these folks, and they'll have the pay the overhead for it. But for the rest of us, wouldn't it be great to be able to select a different car-buying track altogether? I'd get on that in a heartbeat. I think we've already moved there on an inexplicit basis anyway. Why not make it explicit for the "Amazon buyer" like myself? There are millions of us out there!
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oxothuk
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Re: Lets get rid of car dealerships

Post by oxothuk » Mon Jun 10, 2013 10:05 am

Many/most states have franchise laws that more or less require automakers to sell only through dealers. This is the main reason there isn't an "Amazon" service for purchasing new cars.

However there are also "buying services" operating in most states that you can use to avoid the hassles of negotiation, and you just end up going to a dealer for pickup of the new vehicle. Costco and AAA both have this kind of service. We used the AAA service for a car purchase back in 1998 and were pleased with the process. That was a long time ago, so others may be able to give you recent experiences.

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Re: Lets get rid of car dealerships

Post by Hedonic Regression » Mon Jun 10, 2013 10:12 am

Planet Money did a great podcast on this recently http://www.npr.org/blogs/money/2013/02/ ... er-changes.

I don't have anything more to add, but I'll agree that car dealerships are the main reason I dread buying a car.

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Re: Lets get rid of car dealerships

Post by Browser » Mon Jun 10, 2013 10:16 am

oxothuk wrote:Many/most states have franchise laws that more or less require automakers to sell only through dealers. This is the main reason there isn't an "Amazon" service for purchasing new cars.

However there are also "buying services" operating in most states that you can use to avoid the hassles of negotiation, and you just end up going to a dealer for pickup of the new vehicle. Costco and AAA both have this kind of service. We used the AAA service for a car purchase back in 1998 and were pleased with the process. That was a long time ago, so others may be able to give you recent experiences.
I know about car buying services, but you still have the issue of having to mess around with salespeople if you want to check out a car before buying it. You also have the issue of having to accept the price that the car buying service offers. I found out very quickly that I could get a lower price from several dealers in this area right on their website. I'm pretty sure I can do better than a car-buying service middleman on my own. I figure most dealers have a "car buying service" price and that isn't going to be their lowest price because they know who the customer is for that price.
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Re: Lets get rid of car dealerships

Post by nisiprius » Mon Jun 10, 2013 11:19 am

I can't imagine buying a car without a test drive. Seat comfort; how good visibility is for me; how good visibility is for my wife.

If they wanted to move to a sales model where you go to a "showroom" and pay $X for the test drive before ordering over the Internet, I think that could work for me.

Of course, these days, they've "caught" websites charging different prices to different customers, and given the high price of a car, you'd still have to spent hours posting on forums to find out what price thus-and-such website was showing whom, and what hints people had to get it to show you the better prices...
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Re: Lets get rid of car dealerships

Post by Grt2bOutdoors » Mon Jun 10, 2013 11:29 am

We bought our last car from a dealership, only after negotiating the price in advance via e-mail which basically said give us your best price w/o the b.s. and I'll buy the car contigent on a satisfactory test drive the same day. (Later on, two other family members bought their cars from the same dealership due to the "no-nonsense" salesmanship). We took the test drive, inspected the car inside and out - went inside and signed the papers for the agreed upon price and actually got the fellow to toss in a few extras as part of the price. We got the car for like $200-400 above invoice but substantially below MSRP and avoided the normal gimmicks and come-ons that other dealers in the same brand were pulling - we actually walked out of 1 dealer who was playing "games" - so he lost the sale.
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Re: Lets get rid of car dealerships

Post by tadamsmar » Mon Jun 10, 2013 11:32 am

I read or heard somewhere that barter is just a price optimizing process. The merchant offers a high price and some will pay that price. Others will negotiate the merchant down.

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Re: Lets get rid of car dealerships

Post by oxothuk » Mon Jun 10, 2013 11:34 am

Car dealers compete with their customers more than they compete with each other.

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Re: Lets get rid of car dealerships

Post by armeliusc » Mon Jun 10, 2013 11:34 am

Very recently I bought a new car for my wife using "Fighting Chance" technique. It works; I recommend it to anyone buying a new car. I didn't have to negotiate with any salesperson at all, and the whole process took less than two days. When we made the decision to buy the car from the specific dealership, we just went there, did a test drive of the specific car, sign the docs, and left. Of course we did all of our homework before (select the car, the trim, test drive, etc).

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Re: Lets get rid of car dealerships

Post by neurosphere » Mon Jun 10, 2013 11:43 am

nisiprius wrote: If they wanted to move to a sales model where you go to a "showroom" and pay $X for the test drive before ordering over the Internet, I think that could work for me.
For used car purchases from Hertz, you can test drive the car for several days, for $150. If you purchase the car, you get your $150 back. The car price is pre-set. So you drive the car, and either you like it for the price offered, or you don't.

For used cars, it sounds like a great model to follow. I also hate dealers. I once prenegotiated an "out the price" via email, to the penny. I went to my bank and got a cashier's check made out in the same amount, to the penny.

Went to pick up the car and was told that there was a math error in the calculations and that the tax should have been 7.3456% instead of 7.1435% or something like that and I needed to come up with more money because "we are legally obligated to charge the correct sales tax".

I put the check on the table, and said roughly "I'm giving you that check, you are giving me that car, or we have no deal".

It still took an hour of him saying he couldn't do it, and many trips to the "back room to talk to the financial guy", etc before he agreed. What a stupid waste of everyone's time. We would have walked out much earlier, but there were no cars of the type we wanted anywhere in the area, so I didn't have the luxury to take my business elsewhere, unfortunately.

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Re: Lets get rid of car dealerships

Post by tyrion » Mon Jun 10, 2013 11:49 am

If you're a 'glass half full' type, consider the car buying hassle a powerful incentive to keep your current car for as long as possible.

If cars were easy to replace I would be more likely to do it. As it is, I know I can spend a few hours over 2-3 days to get a reasonable price, but it's still a hassle so I'm much rather just stick with what I have. And I dislike making any large purchase - it just feels stressful and invites second guessing.

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Re: Lets get rid of car dealerships

Post by Browser » Mon Jun 10, 2013 12:02 pm

I gotta tell you though, I've gone online with several dealers in this area and seen the very cars I looked at in their lot with an "instant savings" online price that was thousands below list. Literally, click and buy. For example, one dealer regularly has Nissan Muranos with list of $42K for sale at an $8K discount online. Not a "sale" or a "promotion." A Toyota dealer had new Rav4s online for $1500 off plus $3500 dealer incentive, bringing a $30K car down to $25K. Click and buy. I know I can't do any better with Fighting Chance, Costco, or anybody else. Things might be a-changing and some dealers, at least in large metro areas, are selling online at deep discount. You used to have to mess around with contacting the "fleet manager" or doing the e-mail tapdance. Now these dealers are so used to people doing that some of them are just going ahead and giving you a discount price right on the website. They figure that will appeal to the people who are thinking about using Fighting Chance, buying services, and so forth and just cut to the chase. Now, if I could just go into these dealerships to test drive the cars w/o messing with a salesperson that would be ideal. And, if more dealers would get with the trend, there would be a greater selection of brands to buy this way. I'm sure it's the vicious competition in these metro areas, and the fact they depend on selling large quantities of vehicles at lower margins. When I go back to LittleTown, Iowa it's the old game again because there aren't enough sharks in the water.
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Re: Lets get rid of car dealerships

Post by YttriumNitrate » Mon Jun 10, 2013 12:10 pm

One day, I'd like to be able to buy a Tata* at WalMart...

http://usnews.rankingsandreviews.com/ca ... nese-Cars/

*Yes, I know Tata is Indian and the article is about Chinese cars...

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Re: Lets get rid of car dealerships

Post by Epsilon Delta » Mon Jun 10, 2013 12:16 pm

nisiprius wrote: If they wanted to move to a sales model where you go to a "showroom" and pay $X for the test drive before ordering over the Internet, I think that could work for me.
Avis?

I have requested specific models on business trips and have usually been accommodated. Sometimes it's been because I was working with a manufacturer and did not want to show up in a competitors vehicles, but sometimes it's because I wanted to test drive a particular model.

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Re: Lets get rid of car dealerships

Post by ryuns » Mon Jun 10, 2013 12:26 pm

Hedonic Regression wrote:Planet Money did a great podcast on this recently http://www.npr.org/blogs/money/2013/02/ ... er-changes.

I don't have anything more to add, but I'll agree that car dealerships are the main reason I dread buying a car.
Beat me to it. Fascinating corollary is the fight that Tesla is putting up by selling cars directly to consumers instead of via franchised dealership.
http://www.npr.org/2012/11/09/164736569 ... chise-laws

I'm personally very glad Tesla is going to bat on this and hope that this can change things. As the article points out, franchises are in a tough position, because they have to keep claiming that their model is better for the consumer and yet, they argue vehemently that Tesla shouldn't be able to pursue an alternative (which, if they're right, shouldn't be competitive anyway...)
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Re: Lets get rid of car dealerships

Post by sambb » Mon Jun 10, 2013 12:32 pm

I never really had a problem with car dealers. I just go to 2-3 and get the best price. I let all involved that I am getting prices from all 3. Takes about 2 hours on a saturday. I have always been satisfied with the deal i received. I guess for a rare car, it is hard to go to all 3 dealers. But for mainstream cars, it is fairly easy in any suburban area.

Amazing how this just cuts all the shenanigans out.

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Re: Lets get rid of car dealerships

Post by SSSS » Mon Jun 10, 2013 12:37 pm

Browser wrote:I don't see why we can't just move to an Amazon.com opt for selling cars, which would allow deep discount pricing. There would still be physical lots where "Amazon" buyers could go to get "hands on" with vehicles, staffed by a cadre of drones whose only function is to show you the cars and take you on test drives. All the rest of it can be done online.
They'd have to either buy out or sue these guys:

http://www.amazonautogroup.com/

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Re: Lets get rid of car dealerships

Post by Batousai » Mon Jun 10, 2013 12:51 pm

I wouldn't mind getting rid of most of the crap involved in buying a car. However, negotiating and non-standard pricing is a good thing to me. As a well educated consumer, you can buy the car for a lower price than a non-educated consumer. In a lot of ways, I'm ok with paying less than the average person for a car. There are some real morality issues with that model (the status quo), mostly the people who are getting taken advantage are generally, less educated, less financially able to take the burden, etc.

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Re: Lets get rid of car dealerships

Post by texasdiver » Mon Jun 10, 2013 1:15 pm

I hate new car shopping as much as the next person. I also hate used car shopping as much as the next person and have been burned that way too.

That said, I suspect some form of dealership will always be around for parts and service. If all car sales are online, where you going to go to get any warranty work done or any replacement parts? The local mom and pop shop down the street?

Rather than getting rid of dealers, I'd just as soon see some sort of fixed pricing like Saturn used to do. I don't generally mind paying a fixed price for most items. I do it all the time. New iPhone? I know what it is going to cost and what each additional option will cost. Price is the price. I'd be happy to buy a new Toyota the same way. Walk in, pick the car, and just pay a fair price without getting jerked around.

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Re: Lets get rid of car dealerships

Post by toyotaman1 » Mon Jun 10, 2013 1:17 pm

I think that the solution is for manufacturers to have a one price only policy. Everyone pays the same price and the price is the one listed on the monroney label. This would be fair to the consumer and to the car dealers, too.

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Re: Lets get rid of car dealerships

Post by ssquared87 » Mon Jun 10, 2013 1:21 pm

Tesla is trying to combat this with company owned showrooms, kind of like an apple store. I visited one and was impressed by the knowledge, and no hassle attitude of the sales people. That being said, they are involved in many legal battles because they are technically not supposed to have their own stores due to franchising laws. They have won a few cases, lost others. We shall see how it goes, but I think they will lead the industry in this

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Re: Lets get rid of car dealerships

Post by Ted Valentine » Mon Jun 10, 2013 1:22 pm

I purchased from a dealer recently. I thought the salesperson was great. I never entered the dealership either. He brought the car to me. When I was ready to purchase he also brought the paperwork to me. All price and negotiations were done over text message and email.
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Re: Lets get rid of car dealerships

Post by smiley » Mon Jun 10, 2013 2:42 pm

ssquared87 wrote:Tesla is trying to combat this with company owned showrooms, kind of like an apple store. I visited one and was impressed by the knowledge, and no hassle attitude of the sales people. That being said, they are involved in many legal battles because they are technically not supposed to have their own stores due to franchising laws. They have won a few cases, lost others. We shall see how it goes, but I think they will lead the industry in this
a friend bought his Tesla S from the web, and they shipped it to him from one available that met his specifications from another state.

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Re: Lets get rid of car dealerships

Post by johnubc » Mon Jun 10, 2013 2:55 pm

armeliusc wrote:Very recently I bought a new car for my wife using "Fighting Chance" technique. It works; I recommend it to anyone buying a new car. I didn't have to negotiate with any salesperson at all, and the whole process took less than two days. When we made the decision to buy the car from the specific dealership, we just went there, did a test drive of the specific car, sign the docs, and left. Of course we did all of our homework before (select the car, the trim, test drive, etc).
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Re: Lets get rid of car dealerships

Post by dratkinson » Mon Jun 10, 2013 3:09 pm

The short answer. We can't get rid of auto dealerships because they serve necessary functions not covered by the manufacturers.

You may believe that by negotiating a low online *price that you don't need a dealership, but you are overlooking two major components:

(1) Online sites are tied back to B&M dealerships with a vehicle inventory,
(2) and ultimately you want to take possession of your vehicle.



The long answer.

Without dealerships, where would all of those vehicle (new/used, cars/trucks) be stored so you could go pick up the vehicle after you bought it online?

The vehicles can not be stored at the manufacturers as there are too few manufacturing locations, (1) making it logistically impossible to store so many vehicles and (2) making it too far for most customers to travel to pick up their new vehicle.

Manufacturers' prime business model is the making of new vehicles; they are not in the mass-market business of repairing vehicles, or refurbishing used vehicle for resale.

If dealerships did not exist to service local customers, we would need some new entity that is dispersed to make it convenient for local buyers, stocks an inventory of new and used vehicles for immediate sale, repairs existing vehicles, and refurbishes used vehicles for resale. All of the things that the manufacturers are unable to do because of their concentrated locations and lack of prime business focus.

Assuming this new entity existed, we would need a name for this new entity that locally stores, repairs, refurbishes, and sales vehicles. I propose we call this new entity a "new/used vehicle dealership".

And with this we return to our starting point, the continuing need for dealerships.



If you have troubles buying from a dealership, a recent topic said many nice things about dealing with CarMax. (I have no personal experience with CarMax. Just saving it for future reference.)
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Re: Lets get rid of car dealerships

Post by Browser » Mon Jun 10, 2013 3:31 pm

I don't think dealerships are necessary, or are becoming a lot less necessary, in today's world. If I wanted to go into business I think the last thing I'd ask myself is "What kind of business can I start that 98% of my customers will hate?" You would think somebody would have figured out that this is an obsolete business model. i think some are figuring it out and we're going to have the "Amazon.com" option more available in the future -- I certainly hope so. Just as now, not everybody will use that track just because it's there. But a lot of people will prefer that track and dispensing with all the "how to" hooey about how to negotiate price and the buying services that I doubt are getting you the deal you think you're getting from them.
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Re: Lets get rid of car dealerships

Post by likegarden » Mon Jun 10, 2013 4:11 pm

We basically bought a car via the internet using Email, that is after getting some information from local sales men. We live in upstate NY.
I also bought 'Fighting Chance' and used it in final pricing. But model and pricing comparisons I made with Edmunds. Then my wife and I looked at the Toyota Camry in 3 dealerships, also at Chevys in 2 dealerships, drove the cars there, talked to sales people, got some prices and selected the car we wanted. Then I sent out a letter via Email to the internet managers at the dealerships, selected the lowest price and bought that car. I made a deposit at that dealership and we picked up the car days later paying cash.
I would have liked to buy the car from a salesman because they made a contribution to us buying that car, but the dealerships have established that their salesmen have to obtain from us a commission which I am not willing to pay. Any dealership should have a single price and not several.

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Re: Lets get rid of car dealerships

Post by Sam I Am » Mon Jun 10, 2013 4:58 pm

I think the absolute best way to have fewer buying experiences is to maintain your vehicle properly, and keep it for a long time. I have tried to do that my entire driving time. Sometimes family events force one to buy earlier, but that need isn't forever.

I figure I might be lucky enough to just have the need for one more new van, so long as my current vehicle doesn't get wrecked or something.

I bought my current van on the internet, "pimped" it out some; it is the best vehicle purchase I've made.

I don't see dealerships fading away, but I can see the dealership sales forces shrinking greatly over time. Shrinkage of sales forces seems to be one common experience of other retailers, mostly due to the internet.

Today a buyer can have more knowledge of the product than those selling the product.

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Re: Lets get rid of car dealerships

Post by investor » Mon Jun 10, 2013 5:08 pm

SATURN (car) may have had it correct. One no haggle price.
way down at near the bottom of my list of things I like to do is talk / deal with a car salesman.

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Re: Lets get rid of car dealerships

Post by ogd » Mon Jun 10, 2013 5:12 pm

Scion has (or had? this was a few years ago) a no-haggle policy at their dealerships. As in, this is the price, take it or leave it. Very refreshing. The only sliminess left is the dealer trying to sell you more car than you want/afford, and the upselling on maintenance plans & insurance buying services. A fair amount still, but it's progress.

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Re: Lets get rid of car dealerships

Post by MathWizard » Mon Jun 10, 2013 5:19 pm

Dealerships will disappear when there
is no use for them.

I do not understand the attitude of
"Everybody had to do things exactly the
way I do."

How is this thread actionable by the OP?

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Re: Lets get rid of car dealerships

Post by Allan12 » Mon Jun 10, 2013 5:56 pm

armeliusc wrote:Very recently I bought a new car for my wife using "Fighting Chance" technique. It works; I recommend it to anyone buying a new car. I didn't have to negotiate with any salesperson at all, and the whole process took less than two days. When we made the decision to buy the car from the specific dealership, we just went there, did a test drive of the specific car, sign the docs, and left. Of course we did all of our homework before (select the car, the trim, test drive, etc).
Leased my honda crv with fighting chance. I highly recommend it. The whole process went so smooth. My father in law leased a honda pilot the next week. He was in and out in about 30 min.

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Re: Lets get rid of car dealerships

Post by fishnskiguy » Mon Jun 10, 2013 6:08 pm

Car dealerships are as entrenched a part of our society as public employee unions.

Tesla motors wants to sell their cars from factory owned stores and/or the internet. Every state they have applied to so far has said no. The threat to the dealership system is too worrisome for state politicians.

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Re: Lets get rid of car dealerships

Post by oxothuk » Mon Jun 10, 2013 6:21 pm

The main problem with the dealership system, IMHO, is that it creates an artificial information asymmetry in favor of the sellers that is not present in other retail sectors.

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Re: Lets get rid of car dealerships

Post by Browser » Mon Jun 10, 2013 6:22 pm

Haven't bought a car at this point -- decided to wait awhile and if I do buy it will be next winter when I'm back in Phoenix. I'll lean very heavily toward those dealerships that post their discount pricing right on their website for each car in inventory. I may try to use that pricing as leverage if I really, really want to buy another brand from a less forthright dealership. Honestly, if I were shopping for a Nissan or Toyota, I'd probably fly out here from other locations to buy and drive the car back. There's no point messing with a local dealership on this -- best I would do for them is ask for an up or down close match to the internet discount price of a remote dealership.
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Re: Lets get rid of car dealerships

Post by WHL » Mon Jun 10, 2013 6:44 pm

dratkinson wrote:The short answer. We can't get rid of auto dealerships because they serve necessary functions not covered by the manufacturers.
I think you're wrong.

Without dealerships, where would all of those vehicle (new/used, cars/trucks) be stored so you could go pick up the vehicle after you bought it online?

The vehicles can not be stored at the manufacturers as there are too few manufacturing locations, (1) making it logistically impossible to store so many vehicles and (2) making it too far for most customers to travel to pick up their new vehicle.
Each auto manufacturer can own one (or more) large lots or warehouses in big metro areas in each state or region. Or, and most likely better, each vehicle can be built as ordered. This would, however, stop impulse buying, and probably wouldn't be in the mfg.'s best interest. A simple showroom, with a large hidden lot and/or warehouse would solve this issue.

Manufacturers' prime business model is the making of new vehicles; they are not in the mass-market business of repairing vehicles, or refurbishing used vehicle for resale.

If dealerships did not exist to service local customers, we would need some new entity that is dispersed to make it convenient for local buyers, stocks an inventory of new and used vehicles for immediate sale, repairs existing vehicles, and refurbishes used vehicles for resale. All of the things that the manufacturers are unable to do because of their concentrated locations and lack of prime business focus.
How do I put this nicely...lol? Of course the manufacturers aren't currently in the business of doing service - they have dealers to do that for them! They could easily adopt a service department of their own and I suspect it would have highly trained factory employees doing good work at fair prices, not the BS "by the hour" we get charged for now.

The parts department would be no different. Setup a super slick website that anyone can use and allow people to buy direct.

How many years did GMAC make more money than GM? That'd be an interesting statistic, since, you know, GM's core focus was on making cars, not offering financing.

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Re: Lets get rid of car dealerships

Post by ianferrel » Mon Jun 10, 2013 6:46 pm

dratkinson wrote:Without dealerships, where would all of those vehicle (new/used, cars/trucks) be stored so you could go pick up the vehicle after you bought it online?

The vehicles can not be stored at the manufacturers as there are too few manufacturing locations, (1) making it logistically impossible to store so many vehicles and (2) making it too far for most customers to travel to pick up their new vehicle.
This is silly.

It's like saying we still need bookstores, because where would you pick up your books if you just bought them online. The cars would be stored wherever it was convenient to store them based on the logistics chain of the sellers, and would be delivered to customers after purchase. Just like everything else you buy online. I'm quite sure that the current dealership model is not the most efficient way to store vehicles for purchase or to display them for customer tests. The vast majority of car buyers do not need to drive off immediately in their new car. They can afford to wait a day or three for it to be shipped from the nearest fulfillment center. Just like we often do with every other durable good bought over the internet.

There's nothing wrong with a car maker deciding they don't want to deal with the hassle of retail sales and letting some other business take on that challenge. The problem is that they are required to do so, and the lack of competitive pressure makes car buying a more expensive and hassle-filled endeavor.
If dealerships did not exist to service local customers, we would need some new entity that is dispersed to make it convenient for local buyers, stocks an inventory of new and used vehicles for immediate sale, repairs existing vehicles, and refurbishes used vehicles for resale. All of the things that the manufacturers are unable to do because of their concentrated locations and lack of prime business focus.
We would still need some of those services, and the resulting businesses might be a lot like current dealerships. Except that they'd have to compete for business (like my local mechanic does), rather than relying on protectionist legislation like current dealerships do.

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pennstater2005
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Re: Lets get rid of car dealerships

Post by pennstater2005 » Mon Jun 10, 2013 7:22 pm

You always have to be ready to walk away. I did multiple times until I got the deal I wanted. I don't mind the haggling at all. I rather enjoy it. I would buy a car from Amazon. As long as I could test drive it first.
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runner9
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Re: Lets get rid of car dealerships

Post by runner9 » Mon Jun 10, 2013 7:37 pm

http://www.bogleheads.org/forum/viewtop ... 11&t=98183

Here's what we did about a year ago. Sent e-mail with specifics of what we wanted to several dealerships, had them give out the door offer, chance to better their offer based on others offers, etc. Worked very well, will do again in a decade.

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Re: Lets get rid of car dealerships

Post by lightheir » Mon Jun 10, 2013 7:42 pm

Forget car dealerships.

Let's get away with real estate agents. That's a far more egregious situation of not getting value for the money spent imo!

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Re: Lets get rid of car dealerships

Post by Browser » Mon Jun 10, 2013 9:08 pm

I notice these big nationwide car dealership networks, like Auto Nation, are growing. They recruit local dealerships who join the network. I'm thinking these large networks will be able to offer bulk pricing and local pickup anywhere they have a member dealership. And they will have pricing power because of the volumes of new cars they acquire and move. Can you spell W-A-L-M-A-R-T? These guys are potentially going to be able to adopt an internet discount pricing model and run local dealers into the ground. At least I hope that's what I can see coming.
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Re: Lets get rid of car dealerships

Post by leonard » Mon Jun 10, 2013 9:27 pm

Don't support them financially.

Simply buy low mile, excellent condition used cars from private parties. Generally, that is a better economic deal as well. Win/win.
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Re: Lets get rid of car dealerships

Post by cheesepep » Mon Jun 10, 2013 9:43 pm

Just wanted to share a story. I was getting my car serviced at a local dealer and was intrigued by the dealer's ad that said that they will pay above blue book values for all trade-ins. I got a free estimate of my trade-in value, which said it was worth $3,000, but they would pay me $2,000 extra so the total would be $5,000. The trade-in value for my car according to KBB was $5,500 and the private part value was $7,200 or so. I was disgusted by their lies. My car worth $3,000?! Hah!

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Re: Lets get rid of car dealerships

Post by rj49 » Mon Jun 10, 2013 9:56 pm

investor wrote:SATURN (car) may have had it correct. One no haggle price.
way down at near the bottom of my list of things I like to do is talk / deal with a car salesman.

investor

Unfortunately Saturn forgot the more important part--make cars that people want to buy. They also made money through add-on options, financing, and low-ball trade-ins, and they eventually resorted to rebates and other gimmicks to provide discounts without calling them that. I bought a Saturn once, and now realize I paid a steep premium for avoiding negotiating.

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Re: Lets get rid of car dealerships

Post by schwarm » Mon Jun 10, 2013 10:27 pm

lightheir wrote:Forget car dealerships.

Let's get away with real estate agents. That's a far more egregious situation of not getting value for the money spent imo!
Agreed.
The internet has taken a lot of the hassle out of buying a new car. Dealers have to compete with each other and give their best price.
Not everyone goes about buying a car the right way, but that's a bit like investing.

Real estate agents still take a healthy cut, and control most of the market. There was a article in BusinessWeek about this recently, and their conclusion was that RE agents power was that they control both ends of the transaction, buyer and sellers, so they can work to exclude people on both ends who try to circumvent the system.

As someone who is trying to build up net worth, the transaction costs of selling and buying a house is a substantial discouragement to upgrading.

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Re: Lets get rid of car dealerships

Post by jdb » Tue Jun 11, 2013 6:49 am

ssquared87 wrote:Tesla is trying to combat this with company owned showrooms, kind of like an apple store. I visited one and was impressed by the knowledge, and no hassle attitude of the sales people. That being said, they are involved in many legal battles because they are technically not supposed to have their own stores due to franchising laws. They have won a few cases, lost others. We shall see how it goes, but I think they will lead the industry in this
One of the pleasures of buying a Tesla Model S last year was not having to deal with car salesman, have far too many bad experiences being the sucker in negotiating sessions with the salesman and the hidden "sales manager" over the years. Remember well the time I gave them keys to my trade in car for an "appraisal" and somehow could not get it back to leave for hours while they tried to pin me down on a purchase. Anyway, the Tesla was purchased over the internet and over phone from California, and delivered to my house in South Florida, where delivery guy spent a couple hours showing how car works etc. They have service center here where potential customers can take a test drive (though I bought without test drive with no regrets) and of course get car fixed, though not much to fix with no internal combustion engine or transmission or alternator or radiator or oil to replace. They have also come to my house to replace flat tire. And even though car far exceeds expectations I probably would not have purchased if had to go through local dealer, have sworn off ever buying any car directly from a dealer again. Now have order for Tesla Model X in 2015, over internet of course.

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Re: Lets get rid of car dealerships

Post by SPG8 » Tue Jun 11, 2013 7:46 am

I hate buying cars, but we did the Costco thing last time, and it was a really pleasant experience at the dealer.

- eliminate car dealers
- eliminate real estate agents
- eliminate college professors (Harvard MOOCs)
- eliminate Optometrists (have opticians refract)
- eliminate construction workers (hire low-wage illegals with fake SS#s)
- eliminate family practice physician (physician assistants and general cost control)
- eliminate software engineering (Google et al lobbying for expanded H1B)
- eliminate...

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Re: Lets get rid of car dealerships

Post by likegarden » Tue Jun 11, 2013 7:50 am

Dealers see new car bying and old car trade-in as individual profit centers, they want to make money on both.

It boils down to looking at Edmunds for market price for the new car and KBB for trade-in price for the old car and find the net price as the difference. Then the net price the dealer offers must be less than the net price you found on the internet or do not buy and trade. Call or Email the internet manager of a dealer for a new car, they will also do the trade-in, but remember the internet's net price they have to beat. After you did that with several dealers you will know the lowest net price and buy/ trade-in with that dealer. It is nerve wracking.

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Re: Lets get rid of car dealerships

Post by Browser » Tue Jun 11, 2013 9:42 am

cheesepep wrote:Just wanted to share a story. I was getting my car serviced at a local dealer and was intrigued by the dealer's ad that said that they will pay above blue book values for all trade-ins. I got a free estimate of my trade-in value, which said it was worth $3,000, but they would pay me $2,000 extra so the total would be $5,000. The trade-in value for my car according to KBB was $5,500 and the private part value was $7,200 or so. I was disgusted by their lies. My car worth $3,000?! Hah!
When I went to CarMax, they seemed to give me a fair price for my old car based on the book trade-in value. I recommend getting a CarMax price (which is good for a week or so as I recall) and using that to compare to dealer tradein price and negotiate. However, it's all a con game anyway. To make you think you're getting a great tradein price they're just moving numbers from one column to another in the deal. You have to first get the right price on the new car and then bring the tradein into the deal. So, I never tell them I have a tradein up front.
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Re: Lets get rid of car dealerships

Post by dratkinson » Tue Jun 11, 2013 6:04 pm

The short answer. In answer to the topic's second question, factory-trained mechanics using factory parts and working for good independent dealers make the best dealerships... for keeping your vehicle near factory-new. (The only better option would be a true factory repair facility. I'm not aware that they exist.)



The long answer.

Better. So, if I understand the criticism of my support for the need for dealerships' functions... it is that manufacturers can do those same function better.

I disagree that manufacturers could do the dealership function better. (*See below.)


Name change. From above, If manufacturers pick up the necessary dealership functions (local inventory, repair of existing vehicles, refurbishments of used vehicles for resale, financing---captive or independent), then it is no longer a dealership.

I disagree. A name change is meaningless.

"If it walks like a duck and quacks like a duck... then it's a duck."

Bottom line. The local dealership functions can not go away (the OP's original assertion) and is still a "dealership", no matter who does it or what it is called.



Who? This topic has changed since it beginning and now focuses on who is better capable of performing the "dealership functions": independents or the manufactures?

I have an opinion on that too.

Replay the "Wal-Marts of the world are destroying the mom&pop stores" arguments, if manufacturers take over the dealership functions. Use that argument to choose your side.
  • If you are for saving mom&pop stores, then logically you should support independent dealerships and be against manufacturers taking over dealerships.

    If you are for the Wal-Marts of the world taking over, then logically you should support manufacturing dealerships.

My biggest and only concern is for customer service. I do not agree that a few tens of manufacturers could handle the dealership functions as well as tens of thousands of independent dealerships. I already know from history that if Dodge, Ford, and Chevy took over the dealerships that it is considered the buyers fault if my SUV's end gate opens and dumps kids on the road, if my tire blows out causing a high speed rollover, and if my pickup fuel tank explodes. I don't want that manufacturing mentality necessarily following me into the dealership.

Manufacturers taking over the dealership function would remind me of the outcome of the SNL Phone Company skit... "We don't care. We don't have to. We're the phone company."

The Phone Company: http://snltranscripts.jt.org/76/76aphonecompany.phtml



I do share the low opinion of most dealerships and have experienced my share. But I have finally found one that is *worth the money. So, not all dealerships are bad, but it does take work to find the few good ones.
  • *Factory-trained mechanics, long time in business, many awards for customer service, customer references upon request.
With tens of thousand of independent dealerships, I have more choices/chances to find the good ones. And bad independent dealerships can not long survive.

If manufacturers controlled the dealership function, then I simply have fewer choices. And bad manufacturers dealerships can survive on their parents capital, because, it would be the only game in (all) town(s). And as the only game in town, there would be no reason to improve. Bwaa Haa Haa! :twisted:

*The word you are looking for is "monopoly". You learned it in "Econ 101".
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