Why must we buy cars through dealerships instead of directly from the manufacturer?

[SakhirM4]

Originally Posted by JamesNoBrakes

Are you bringing your car into the dealership every week?

No. In fact, it has only been to the dealership for the 1200 mile maintenance since I bought it 20 months ago.

[RM7]

Originally Posted by SakhirM4

No. In fact, it has only been to the dealership for the 1200 mile maintenance since I bought it 20 months ago.

So why again does Austin need more than one dealership?

[David70]

Originally Posted by jwzimm

Manufacturers already control the sales price. They set Invoice pricing and the dealers are required to pay that. They also set MSRP (it does stand for Manufacturer Suggested Retail Price after all). Your perceived savings on the price of the car is really no more than a trick. The best you can ever really do is get the car for invoice (we won't discuss dealer holdback here). There is no difference between that vs. buying directly from the manufacturer then.

Manufacturer sets the price that the dealer pays but after that I have called multiple dealers and gotten better pricing from some compared to others. How does this happen, and is really just a trick when I end up getting the best price from another dealer? I have never seen evidence of a selling price from the dealer to the consumer that is required to be charged from the manufacturer so based on this I would say the manufacturer isn't controlling the selling price. If the manufacturer owned all of the dealership we wouldn't let the consumer play individual locations against each other.

I agree that MSRP is close to irrelevant, maybe some benefit in rough comparisons on classes of cars.

[jwzimm]

Originally Posted by David70

Manufacturer sets the price that the dealer pays but after that I have called multiple dealers and gotten better pricing from some compared to others. How does this happen, and is really just a trick when I end up getting the best price from another dealer? I have never seen evidence of a selling price from the dealer to the consumer that is required to be charged from the manufacturer so based on this I would say the manufacturer isn't controlling the selling price. If the manufacturer owned all of the dealership we wouldn't let the consumer play individual locations against each other.

I agree that MSRP is close to irrelevant, maybe some benefit in rough comparisons on classes of cars.

They are controlling it by setting what the invoice price that the dealer pays them is. No dealer would sell a car for less than what they paid for it as they have to make some profit to stay in business. My point is, I would prefer to not have to shell out more money to finance the dealer when their services are not something that I need. I am forced to do that, however, since I cannot legally buy the car direct from the manufacturer for invoice price. As an example, I was forced to pay my selling dealer $2500 just to put in the order for me. I did all the coordinating over email and only stepped foot in the dealer to sign papers.

[David70]

Originally Posted by jwzimm

They are controlling it by setting what the invoice price that the dealer pays them is. No dealer would sell a car for less than what they paid for it as they have to make some profit to stay in business. My point is, I would prefer to not have to shell out more money to finance the dealer when their services are not something that I need. I am forced to do that, however, since I cannot legally buy the car direct from the manufacturer for invoice price. As an example, I was forced to pay my selling dealer $2500 just to put in the order for me. I did all the coordinating over email and only stepped foot in the dealer to sign papers.

I agree the law needs to be changed to allow them to sell products how they want but I don't see the $2500 disappearing (maybe being reduced some) just because they can sell direct. Did you buy the car off the lot or order it? Did you have a trade? Do you want a location to do warranty work? Do you want them to have a nice facility to do all of the above?

The $2500 didn't go to just putting the order in front of you. It paid for the location, inventory, salesperson, advertising, management of the location, etc. Where Tesla sells direct they still have all of the above and one way or the other someone will pay for it.

[jwzimm]

Originally Posted by David70

I agree the law needs to be changed to allow them to sell products how they want but I don't see the $2500 disappearing (maybe being reduced some) just because they can sell direct. Did you buy the car off the lot or order it? Did you have a trade? Do you want a location to do warranty work? Do you want them to have a nice facility to do all of the above?

The $2500 didn't go to just putting the order in front of you. It paid for the location, inventory, salesperson, advertising, management of the location, etc. Where Tesla sells direct they still have all of the above and one way or the other someone will pay for it.

I ordered the car and picked it up in Germany. I had no trade-in. I even asked them not to wash or prep the car in any way when they received it for re-delivery to me since I was taking it directly to my detailer. When I picked it up from them I didn't even have to sign anything. If I could have I would have had the car delivered directly to my detail shop instead.

Warranty work is separate from this discussion. They are paid by BMW for warranty work and by the customers for out of warranty work. These rates are fair and subject to competition. If the sales portion of the business were completely removed you would still have the service shop that would be self supporting based on the income of that aspect of the business. In fact, one could argue the customer would benefit more as the shop would need to properly compete with other shops in order to stay viable and could not rely on the profits from the sales portion of the dealership.

[DaveJB]

I'm as disgusted by the way it's setup as anybody out there, but I also don't expect to EVER buy a new car. I know expensive is a relative term, but I'll let someone else swallow that huge depreciation in value the first few years.

Also, my credit union, IIRC, offers a new car buying service that looks pretty awesome. Not sure how common that is.

[David70]

So if they get rid of all locations to buy cars, you buy the car over the internet without actually ever seeing or driving it, they don't take trades, you don't talk to anyone about the car (someone is going to pay for this salesperson), then you pick it up at the plant, get the warranty work done by an outside company contracted to do the work (so the manufacturer doesn't have to build a facility to do the work) I think your plan will work.

Then, even with people that buy through the "European Delivery Program", almost all go to the dealer, look at and test drive it, probably ask someone questions, and expect a "luxury" facility worthy of the car they are buying.

If the manufacturer has to build a facility to do warranty work it is part of the equation as just paying yourself to fix the problems doesn't make the costs go away. Your idea of getting rid of the dealership still requires someone to build a service facility (get rid of the thousands of dealers and they will have to build thousands of repair facilities) and I am assuming most will then want a showroom, then someone to explain the car, then somewhere nice to sit down, then...

Changing dealership laws won't fix all of these issues.

[FriskyDingo]

What I want to know is why everyone seems to think that buying direct from the mfr is going to be less money. As it stands, dealers pay personnel to clean and prep the car for delivery, someone to do contract and title work, and someone for accounting as a minimum. You think if the car makers had to pay for that instead of dealers, the price is going to go down? I want some of what you guys are smoking.


And that's not even getting into trade-ins, and so on and so forth.

[SakhirM4]

Originally Posted by JamesNoBrakes

So why again does Austin need more than one dealership?

Why do you care? Why are you ragging me?

If a person has an "immediate" repair situation with their BMW, it may be as much as a couple of weeks before BMW of Austin can schedule the repair. Service appointment scheduling that aligns better with the customers needs is a good thing and another dealer has the potential to reduce the load, depending on the quality of the dealer.

Done - I quit.

[jwzimm]

Originally Posted by David70

So if they get rid of all locations to buy cars, you buy the car over the internet without actually ever seeing or driving it, they don't take trades, you don't talk to anyone about the car (someone is going to pay for this salesperson), then you pick it up at the plant, get the warranty work done by an outside company contracted to do the work (so the manufacturer doesn't have to build a facility to do the work) I think your plan will work.

Then, even with people that buy through the "European Delivery Program", almost all go to the dealer, look at and test drive it, probably ask someone questions, and expect a "luxury" facility worthy of the car they are buying.

If the manufacturer has to build a facility to do warranty work it is part of the equation as just paying yourself to fix the problems doesn't make the costs go away. Your idea of getting rid of the dealership still requires someone to build a service facility (get rid of the thousands of dealers and they will have to build thousands of repair facilities) and I am assuming most will then want a showroom, then someone to explain the car, then somewhere nice to sit down, then...

Changing dealership laws won't fix all of these issues.

As I said from the get-go, I am not for completely eliminating dealerships. I just do not like that there are now LAWS that require you to buy from the dealer. The idea that a law can force me to use a middle-man and pay the added cost of that strikes me as wrong.

As has been seen, Tesla is doing it right now and it is working well for them. Why must we write a law that makes their method of doing business illegal? If it were not for the dealership lobbyists such laws would never be proposed.

[David70]

Originally Posted by jwzimm

As I said from the get-go, I am not for completely eliminating dealerships. I just do not like that there are now LAWS that require you to buy from the dealer. The idea that a law can force me to use a middle-man and pay the added cost of that strikes me as wrong.

As has been seen, Tesla is doing it right now and it is working well for them. Why must we write a law that makes their method of doing business illegal? If it were not for the dealership lobbyists such laws would never be proposed.

I agree, build a product and sell it how you want. McDonalds has both company owned stores and franchisees.

[newoldbeemer]

I hate dealing with sneaky car salesmen, but I do like the showroom experience.

[Efthreeoh]

Originally Posted by David70

I agree, build a product and sell it how you want. McDonalds has both company owned stores and franchisees.

So does GM...

[Bavarian Beast]

I have bought a lot of cars, both new and used, and basically 2 our of 20 dealers have been good. As a consumer I think you should know more about the purchase options and local pricing by research. Also, you have to understand when you genter into a dealership with less than upstanding business dealings that you either settle in for the long game or move on. When you find the good ones support them with business and word of mouth to others. It isn't optimal, but it is reality. At least in my dealings.

[P1]

Volvo is starting to do this now also. You still have to take delivery at a dealership though.

[Msizzle]

This is a ridiculous suggestion that would NEVER work and the cars would cost more money not less, the dealers do make some profit on the cars but they get to subsidise it with the other departments, used cars, parts, and service.
1) if purchased from factory only they would have to charge more to cover expenses that can't be shared over 3 other departments
2) building independent service centers?
3)what happens to trades and where will they go? who negotiates the value?
4)how would people get loans? especially on a lease?
5)A central ordering center would never be able to facilitate all the dmv laws for every state
6)INVENTORY who would store it? what kind of selections without a dealer network? Even the largest auto make couldn't afford to float the cost of its entire fleet.
7)Online order means 1 price only, so if you are smart savvy and educated you will pay the same price as your dumb ass neighbor
8)Delivery process would be youtube? if something goes wrong with the car now what?ship it back??


So maybe for a small low volume operation you could hope for this but it would be a failing business model for items of this cost that need so much support to finance/service/and register.

[M6Pilot]

Originally Posted by Msizzle

This is a ridiculous suggestion that would NEVER work and the cars would cost more money not less, the dealers do make some profit on the cars but they get to subsidise it with the other departments, used cars, parts, and service.
1) if purchased from factory only they would have to charge more to cover expenses that can't be shared over 3 other departments
2) building independent service centers?
3)what happens to trades and where will they go? who negotiates the value?
4)how would people get loans? especially on a lease?
5)A central ordering center would never be able to facilitate all the dmv laws for every state
6)INVENTORY who would store it? what kind of selections without a dealer network? Even the largest auto make couldn't afford to float the cost of its entire fleet.
7)Online order means 1 price only, so if you are smart savvy and educated you will pay the same price as your dumb ass neighbor
8)Delivery process would be youtube? if something goes wrong with the car now what?ship it back??


So maybe for a small low volume operation you could hope for this but it would be a failing business model for items of this cost that need so much support to finance/service/and register.

i agree

[mad_max]

The say free market. They say capitalism. BS.

[M4chiavellif82]

Originally Posted by Msizzle

This is a ridiculous suggestion that would NEVER work and the cars would cost more money not less, the dealers do make some profit on the cars but they get to subsidise it with the other departments, used cars, parts, and service.
1) if purchased from factory only they would have to charge more to cover expenses that can't be shared over 3 other departments
2) building independent service centers?
3)what happens to trades and where will they go? who negotiates the value?
4)how would people get loans? especially on a lease?
5)A central ordering center would never be able to facilitate all the dmv laws for every state
6)INVENTORY who would store it? what kind of selections without a dealer network? Even the largest auto make couldn't afford to float the cost of its entire fleet.
7)Online order means 1 price only, so if you are smart savvy and educated you will pay the same price as your dumb ass neighbor
8)Delivery process would be youtube? if something goes wrong with the car now what?ship it back??


So maybe for a small low volume operation you could hope for this but it would be a failing business model for items of this cost that need so much support to finance/service/and register.

all good SOLID points including number 7. woot woot

[TheBingoBalls]

The job of a dealer is supposed to make the car buying process simple and as less stressful as possible. As many have shared, majority of dealers don't do this, in fact they make it a lot more difficult and more stressful in some cases.

Doing your research is always a good idea, but it shouldn't be a requirement. I don't have a huge issue with the dealers in the area but that's only because I understand the buying process and know the product. If I allowed my parents to go in alone, the dealer could easily make extra profit off them.

I'm not one of those customers who look for ridiculously low prices, basically handcuffing the dealer, I'm fine paying a fair price and understand the dealer needs to make some profit operate, but when they start trying to weasel additional money, that's where I have a problem and this almost always happens.

[David70]

Originally Posted by TheBingoBalls

The job of a dealer is supposed to make the car buying process simple and as less stressful as possible. As many have shared, majority of dealers don't do this, in fact they make it a lot more difficult and more stressful in some cases.

Doing your research is always a good idea, but it shouldn't be a requirement. I don't have a huge issue with the dealers in the area but that's only because I understand the buying process and know the product. If I allowed my parents to go in alone, the dealer could easily make extra profit off them.

I'm not one of those customers who look for ridiculously low prices, basically handcuffing the dealer, I'm fine paying a fair price and understand the dealer needs to make some profit operate, but when they start trying to weasel additional money, that's where I have a problem and this almost always happens.

The only difficult and stressful part comes from trying to get the best price, not a fair price. I would say a fair price comes pretty easy but if you don't want to deal with any of it go through a car buying service, price isn't the best but it is good and once they have the car you want you walk in sign the paperwork and walk out (get financing at your local bank or online or whatever if it helps). I bought a car about 15 years ago this way and walked in the dealership, inspected the car, and was gone in about 15 minutes.

As said above, having a fixed price set by the manufacturer or a manufacturer run dealership where you still negotiate the best price isn't a guarantee of it being better. Naturally, some of the Tesla run stores are better than others (still comes to who is managing them) and with no negotiation I guess some would say it is better. Once demand dies down it will be interesting to see how pricing is handled, negotiate with the location or price discounts on a national/local level for everyone.