Would Buying Cars Direct Be Better for the Consumer?
- Thread starter parimento1
- Start date
Define better.
In some ways, dealers can make it easier. Doesn't mean it's better fiscally for consumers. A local dealer may have arrangements with finance resources that can get people financed. (Doesn't mean the people should be buying that car if special hurdles are necessary to get them into a car.
Dealers can also deal with trade ins.
So for some, a dealer can get the consumer in a car because they have some special local advantages. Doesn't mean it's good for the consumer.
For those who have an 800+ credit score, can come in with a pre-approved draft and have no trade in, the dealer is much less valuable. There are still places where they can help. When we bought our 2017 Rav4, we couldn't get it exactly the way we wanted it in Illinois. The Toyota dealer knew that the distributor for Tennessee got cars the way we wanted, an XLE, FWD, Tech Package, no leather. (oilBabe is not a fan of leather seating)
So that dealer's knowledge was useful given what we wanted.
But that could also be done by Toyota if they could get out of their regional distribution agreements.
Frankly, I doubt the carmakers want to get out of their dealer arrangements. You and I are not customers of GM or Ford or Toyota to name a few, the dealerships are. They don't have all that messy day to day contact with the end user of the product. They are shielded by the dealers.
If a dealer consistently makes the carmaker look bad, the carmaker can cut back on the desirable cars they get and/or ultimately fire them as a dealer.
While many of us would love to cut out the dealer middleman, seeing little to no value in what they do, apparently the carmakers see the current environment as advantageous. Or, at the very least, the upside of dismantling the dealership model is not worth the effort from both a business as well as on the legal front to deal with state laws and dealership franchise agreements.
The key take away is that you are I are not customers of the car makers, but of the dealers who sell the cars. As soon as you realize this, a lot more makes sense.
In some ways, dealers can make it easier. Doesn't mean it's better fiscally for consumers. A local dealer may have arrangements with finance resources that can get people financed. (Doesn't mean the people should be buying that car if special hurdles are necessary to get them into a car.
Dealers can also deal with trade ins.
So for some, a dealer can get the consumer in a car because they have some special local advantages. Doesn't mean it's good for the consumer.
For those who have an 800+ credit score, can come in with a pre-approved draft and have no trade in, the dealer is much less valuable. There are still places where they can help. When we bought our 2017 Rav4, we couldn't get it exactly the way we wanted it in Illinois. The Toyota dealer knew that the distributor for Tennessee got cars the way we wanted, an XLE, FWD, Tech Package, no leather. (oilBabe is not a fan of leather seating)
So that dealer's knowledge was useful given what we wanted.
But that could also be done by Toyota if they could get out of their regional distribution agreements.
Frankly, I doubt the carmakers want to get out of their dealer arrangements. You and I are not customers of GM or Ford or Toyota to name a few, the dealerships are. They don't have all that messy day to day contact with the end user of the product. They are shielded by the dealers.
If a dealer consistently makes the carmaker look bad, the carmaker can cut back on the desirable cars they get and/or ultimately fire them as a dealer.
While many of us would love to cut out the dealer middleman, seeing little to no value in what they do, apparently the carmakers see the current environment as advantageous. Or, at the very least, the upside of dismantling the dealership model is not worth the effort from both a business as well as on the legal front to deal with state laws and dealership franchise agreements.
The key take away is that you are I are not customers of the car makers, but of the dealers who sell the cars. As soon as you realize this, a lot more makes sense.
1. Cars are worth what people are willing to pay.
2. That means the average price would be the same. The manufacturers would move the additional profit onto their balance sheet.
3. Assuming they went to a set price system (likely) like Tesla you would eliminate the winners and the losers. People who are shrewd negotiators or bother to research the real market value would lose and those that are not or don't bother to do due diligence would be rewarded.
2. That means the average price would be the same. The manufacturers would move the additional profit onto their balance sheet.
3. Assuming they went to a set price system (likely) like Tesla you would eliminate the winners and the losers. People who are shrewd negotiators or bother to research the real market value would lose and those that are not or don't bother to do due diligence would be rewarded.
agents or brokers, in this case car dealers, can sometimes add value to some consumers. wouldn’t it be best to have a choice of either ordering direct, even a factory pickup, or going through a dealer? that said, the car dealership experience is truly awful. maybe some car buying customers are stupid, lazy, arrogant, overbearing, shady and condescending, but such behavior should not be reflected inside a dealership. after all the hype of touchless buying during the flu panic and with younger consumers eschewing brick&mortar stores for online buying, dealerships that hope to prosper will clean up their acts.
It's not a big deal to order a car.....it really isn't. As you know-you pick option packages-not individual options (as you could do many years ago).
This is rarely done anymore-because some financing incentives or rebates only apply to dealer stock. So-you could essentially end up with options you didn't want an "no additional cost" verses ordering when you factor in the "money specials" going on.
However-as far as new cars are concerned-it's going to be at least a year IMHO (probably longer) until we see wide spread exceptional rebates and/or financing on Trucks and SUV/CUVs. Rebates/discounts on trucks are 50% of what they were pre-COVID.
I was injecting a bit of humor there but in reality I do like the direct model. Auto manufacturers could adapt production to avoid waste. For the consumer who is in need of a vehicle right away, there would have to be something available either for sale or for use until their ordered car comes in. The time frame is important. How long will consumers wait? 30 days might be reasonable. 6 months may be too long.
Without dealerships, where will you get it serviced? Where will you take it for warranty work or recalls? Slap a stamp on it and mail it back to the manufacturer?
Tesla has service centers. You can also test drive cars there.
Today I was at Pleasenton Lexus. The rep listed all his inventory on a huge computer monitor; on hand, in transit from Canada and in final assembly at Canada.
All with detail, MSRP and deliver dates.
I am looking for a white on red RX450h F Sport, which is hard to get. One is coming in next Friday.
There was a quote in my email before we got home.
Pick out what you want and make an offer. In Tesla's case, pick your options (there aren't many) and click. You will get a delivery date.
Computers and the Internet have changed the world. Dealerships are toast.
Many, many folks need to be sold on a vehicle that they can drive home, if not today than within a few days at most. They need to be sold on the combination of options that those vehicles ready to be purchased have and the reasons that they want one of those particular vehicles. They don't much care if the AT is a CVT or conventional, or if the engine has a turbo. just that they will like to drive it.
They need to know that the car the are buying is right for them. Detailed specs for each of the myriad of possibilities on all of the manufacturers many vehicles is not something they want to hear. They need people to walk them through the finances because it is one of the more significant and expensive things they will ever purchase. They want to know that the service department at the place they choose to buy will be there for them.
It is going to a long time before the way of selling cars is going to change. The sales people at the dealer that are successful specialize in sales, not technical specs of all vehicles.
They need to know that the car the are buying is right for them. Detailed specs for each of the myriad of possibilities on all of the manufacturers many vehicles is not something they want to hear. They need people to walk them through the finances because it is one of the more significant and expensive things they will ever purchase. They want to know that the service department at the place they choose to buy will be there for them.
It is going to a long time before the way of selling cars is going to change. The sales people at the dealer that are successful specialize in sales, not technical specs of all vehicles.
This is exactly why they add no value to me.
But they add quite a bit of value to the vast majority of buyers who are mostly in a far different situation.
I don't disagree - I forget that many really need help with this transaction. I'm not advocating for removal of the dealer - you still need warranty and service etc., but it would sure be nice for those that don't need the help/just want to buy the car to be able to do so without the hassle. I know outfits like Carmax and Carvana are already in that camp.
When a dealer's credit rep offers you credit, it may not be the best rate for you. It may be the best deal for them, based on kickbacks or whatever.
Don't think they are doing you any favors!
Credit is another opportunity for lenders and buyers to cut out the middle man.
Everyone at the dealer is getting their cut. And that pretty dealership wasn't built for your benefit.
It is the dealership's goal to maximize their profit. You are the source of that profit.
Don't think they are doing you any favors!
Credit is another opportunity for lenders and buyers to cut out the middle man.
Everyone at the dealer is getting their cut. And that pretty dealership wasn't built for your benefit.
It is the dealership's goal to maximize their profit. You are the source of that profit.
Why does selling direct preclude having service bays, a facility, or inventory available?
Nobody said the direct model has to exclude any of these things.
Any of the big three could look just like a dealer does today without the franchisees name on the sign.
UD
