What do you guys think?
Would Buying Cars Direct Be Better for the Consumer?
- Thread starter parimento1
- Start date
I think it would be at least as beneficial as buying through a dealer, but aside from buying a Tesla you'll never know as the dealers won't give up their lock on the monopoly.
According to NADA dealerships enrich communities substantially and protect the consumer from the evil manufacturer.
According to NADA dealerships enrich communities substantially and protect the consumer from the evil manufacturer.
In terms of pricing it appears to be a hard no as it limits choice
With a simple car for an informed buyer, dealerships are pretty much a wasted cost IMO. Most people can order beige Corolla's with AC and automatics and live happily ever after without seeing a dealership again. People who want more complicated cars with a wider range of options still need a showroom to see what they are getting.
Direct to consumer bike sales work pretty well if the customer understands what the fitting dimensions mean, but I do see the odd bike sold new because it doesn't fit like the buyer thought.
Direct to consumer bike sales work pretty well if the customer understands what the fitting dimensions mean, but I do see the odd bike sold new because it doesn't fit like the buyer thought.
You can't buy a new Tesla in Utah because of the franchise laws. Larry H. Miller (now deceased- dealerships still in the family however) and others have amassed fortunes because of these laws.
Karl Malone (many of you know-ex basketball star) owns a Toyota Dealership in the Salt Lake Area-and a RAM dealer up near Park City, Utah.
We need to be able to buy factory direct.
Karl Malone (many of you know-ex basketball star) owns a Toyota Dealership in the Salt Lake Area-and a RAM dealer up near Park City, Utah.
We need to be able to buy factory direct.
You can get pretty much all the information you want: interior pics, reviews, pricing, etc., on your own now. You don't need a "salesman" that's fully on commission to tell you about a vehicle. It's an ancient business model and I can't see it lasting another 20 years.
Having multiple ways to buy what you want is good for everyone but the dinosaur working at traditional dealerships.
Having multiple ways to buy what you want is good for everyone but the dinosaur working at traditional dealerships.
You can but in terms of raw cost the independent dealers seem to beat online sellers on price despite higher overhead.
Virtual sales are convienient but still not competitive
Never once had a salesman at an auto dealership know more about the vehicle I was buying than I did.
That beautiful dealership and its sales team, managers, janitors, landscapers, etc. are there at no cost to the consumer, right?
We bought the Tesla in December 2018.
At the local service center, wifey took a test drive. Then we looked at inventory on their computer to find what was available.
I gave them a credit card for a $500 deposit. I signed my name 1 or 2 times; that's it. 5 minutes or less for paperwork.
Wifey completed purchase at home on her laptop. Basically transferring money to Tesla online. Click click click. Done.
Car was delivered to our door.
We bought the Tesla in December 2018.
At the local service center, wifey took a test drive. Then we looked at inventory on their computer to find what was available.
I gave them a credit card for a $500 deposit. I signed my name 1 or 2 times; that's it. 5 minutes or less for paperwork.
Wifey completed purchase at home on her laptop. Basically transferring money to Tesla online. Click click click. Done.
Car was delivered to our door.
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UD, I am gonna guess you are not the average customer. On a graph, you are an outlier.
Woe is the salesman on the other side of you at the bargaining table.
Kestas
Staff member
Isn't there a law that prevents auto manufacturers to sell directly to consumers?... that cars must be sold through dealers?
yes and why do you think that law exists lol? Do you think the auto dealers didn’t pay some politician off for that law?
Only a few states. And yes, this is for the dealership's benefit.
I think you know Tesla does not have dealerships. There are mall stores where you can see the cars and sit in them; some of these have been closed.
Service centers allow for test drives. That's what we did.
You order what you want. If there is one in local inventory you will get it within days otherwise get in line.
In March I was looking at the new Model Y. They told me they were switching manufacturing over to European sales; wait time was about 6 weeks here in Silicon Valley. The Y is not so much for me.
Just go to Tesla website; it's really simple. There may be benefit to go to a Service Center to order such as Stealth Mode Performance which is Performance Mode with 19" wheels and a few other changes. Not sure.
Tesla
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I agree with you for the most part as long as there was some way to see and test drive vehicles. Some vehicles are much nicer in person and some not so much. And I've heard stories of people buying cars (without taking a test drive) and then discovering they can't reach the brake pedal, and things like that.
Sales guys hardly ever know very much about the vehicles I'm interested in buying but they often have useful information about the dealership's practices. Things like "we never bring in a Mazda 6 with a manual transmission".
For what it's worth, I understand that dealerships don't make much money on new vehicle sales. They might do better on trade ins and used vehicle sales. Seems they make their money on service and financing.
At least some manufacturers are quite demanding, requiring regular renovations and updates of perfectly good showrooms and facilities.
The franchise laws vary from state to state. In some states with franchise laws-Tesla has been given an exemption. In Utah-Tesla has tried MULTIPLE TIMES for an exemption without any positive results. When you have multi millionaires (Dealer owners) contributing to the campaigns of several different state legislators-it's tough going.
Direct sales are impossible and it's not because of dealer finance laws. Direct sales are impossible because of us and how we buy cars.
How do the majority (99%) of people buy cars? We go to a dealership and we either buy something they have on the lot or they transact with another dealer to obtain the vehicle you want. Either way, the car you buy is already built, sitting on a lot, ready for your purchase. There is always the opportunity to order a car and wait, but that is seldom used. Why it is this way is a different discussion for a different day, but it is the way it is.
How we buy cars is important because of all that inventory we choose from. Cars are really expensive. Automakers shoot for a 70-days supply of a given model in inventory. For something like Ford F-series trucks, that's about 163,000 trucks. Assuming an average of $34,200 per truck to build, that's $5.6 billion in unsold inventory sitting on the liability side of the balance sheet.
Franchised dealers to the rescue. As soon as those truck are built, they are shipped off to dealers who then "purchase" the inventory using floor plan financing. This gets the liability off the automakers balance sheet and spreads it over the dealer network.
This is how cash flow works in the automotive manufacturing sector and franchised dealers are a key in making it work. To change this will require significant reshaping of financials and customer buying habits.
This is where you say: But what about Tesla? They have a successful direct sales model!
Tesla sold 367,000 cars in all of 2019, worldwide. GM sells that many in 3 weeks.
Tesla is a small manufacturer. The financials of direct sales work at this small scale. Plus, Tesla customers are willing to buy cars the way most of us aren't: Placing an order, making a down payment, and waiting.
As it is now, you can already see Tesla conforming to fit the realities of the financial model. The Model Y really has only two options of consequence: 1) Long Range or Performance and 2) 5-seat or 7-seat. The rest is either easily added/removed (trailer hitch and wheel style), color (exterior/interior), and software (full self-driving or not). When the Model S was launched, there were multiple battery sizes, single or dual motor, different suspension types, and so on. Those a la cart options have gone by the wayside with each new model launch. This greatly increases Tesla's manufacturing flexibility by reducing vehicle ordering complexity.
Also, don't think manufacturers won't get hinky with direct-sales either. The more expensive and more profitable Model Y Performance has a 2-3 wait for delivery. The less expensive and less profitable Model Y Long Range has a 6-10 week wait: "I don't need all that performance, but it'd be cool, plus it's only a reduction of like 20 miles in range. I guess I'll spend the extra money, especially since it means I get my car by early-October instead of late-Novermber. "
Kinda sounds like: "I really don't need everything in the Lariat, but it'd be cool and the dealer doesn't have any XLT on the lot. It's not that much more expensive. I guess I'll go with what's on the lot."
Of course, we could also add in talk about servicing a car park of millions upon millions of vehicles, parts distribution to both the factory service network and independent aftermarket, and employment of all the people it takes to sell and service 17 millions cars each year across the globe. These are all handled by that independent dealer network.
How do the majority (99%) of people buy cars? We go to a dealership and we either buy something they have on the lot or they transact with another dealer to obtain the vehicle you want. Either way, the car you buy is already built, sitting on a lot, ready for your purchase. There is always the opportunity to order a car and wait, but that is seldom used. Why it is this way is a different discussion for a different day, but it is the way it is.
How we buy cars is important because of all that inventory we choose from. Cars are really expensive. Automakers shoot for a 70-days supply of a given model in inventory. For something like Ford F-series trucks, that's about 163,000 trucks. Assuming an average of $34,200 per truck to build, that's $5.6 billion in unsold inventory sitting on the liability side of the balance sheet.
Franchised dealers to the rescue. As soon as those truck are built, they are shipped off to dealers who then "purchase" the inventory using floor plan financing. This gets the liability off the automakers balance sheet and spreads it over the dealer network.
This is how cash flow works in the automotive manufacturing sector and franchised dealers are a key in making it work. To change this will require significant reshaping of financials and customer buying habits.
This is where you say: But what about Tesla? They have a successful direct sales model!
Tesla sold 367,000 cars in all of 2019, worldwide. GM sells that many in 3 weeks.
Tesla is a small manufacturer. The financials of direct sales work at this small scale. Plus, Tesla customers are willing to buy cars the way most of us aren't: Placing an order, making a down payment, and waiting.
As it is now, you can already see Tesla conforming to fit the realities of the financial model. The Model Y really has only two options of consequence: 1) Long Range or Performance and 2) 5-seat or 7-seat. The rest is either easily added/removed (trailer hitch and wheel style), color (exterior/interior), and software (full self-driving or not). When the Model S was launched, there were multiple battery sizes, single or dual motor, different suspension types, and so on. Those a la cart options have gone by the wayside with each new model launch. This greatly increases Tesla's manufacturing flexibility by reducing vehicle ordering complexity.
Also, don't think manufacturers won't get hinky with direct-sales either. The more expensive and more profitable Model Y Performance has a 2-3 wait for delivery. The less expensive and less profitable Model Y Long Range has a 6-10 week wait: "I don't need all that performance, but it'd be cool, plus it's only a reduction of like 20 miles in range. I guess I'll spend the extra money, especially since it means I get my car by early-October instead of late-Novermber. "
Kinda sounds like: "I really don't need everything in the Lariat, but it'd be cool and the dealer doesn't have any XLT on the lot. It's not that much more expensive. I guess I'll go with what's on the lot."
Of course, we could also add in talk about servicing a car park of millions upon millions of vehicles, parts distribution to both the factory service network and independent aftermarket, and employment of all the people it takes to sell and service 17 millions cars each year across the globe. These are all handled by that independent dealer network.
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