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

[Viffermike]

Point 1: Based on NADA employment data, eliminating the new-car dealer system would kill more than 1.1 million jobs. Do you think any politician wants to be responsible for that?

Point 2: If you lose the dealer system, where are you going to be able to test drive new cars?

Point 3: If you lose the dealer system, where will you get your under-warranty car serviced for warranty repairs?

Point 4: If you lose the dealer system, what keeps car manufacturers from not disclosing their pricing and profit structure relative to the marketplace (i.e., competing makes and models)? They sure as heck don't do it now -- Tesla, in fact, is a great example of this. MSRP, which does this in a laissez faire open-barter market, would disappear because the price would no longer be suggested; it would be fixed.

Point 5: I'll equate this theoretical to something I'm very involved in: musical instruments. I play bass. Back in 'the day', one could 'test drive' many instruments on the market in brick-and-mortar music stores. Those have now largely disappeared; most of the only ones remaining are huge chains that control your access of makes and models -- and most of those are plebian makes that are not good bargains. For those who know their instruments and want to try the entirety of what's available out there, one has only three options:

1). Play instruments that other people own (friends, mainly). Yeah, right. Who's gonna let you drive their car to see if you want one for yourself?
2). Buy new instruments online until you find "the one". Who has the resources for that? If you don't like something, you have to sell it -- and almost certainly lose money on it -- then start over. Besides: Don't you want to know that a specific instrument is right for you before you shell out for one?
3). Buy used instruments online until you find "the one", then shell out for a new one that's yours and yours alone. This is what many musicians do. Basically, you have to buy something to try it out. It sucks. Imagine having to do that with cars, folks.

Seriously. Unless one of three things occurs, this will never happen:
1). The government mandates it, or
2). Vehicle manufacturers decrease to the point to where there are so few, the dealer system collapses and/or consolidates, or
3). Dealers themselves decrease in number, through attrition, mergers, or other purging, to the point where manufacturer representation isn't what would define individual dealers; breadth of stock would. (Think Carmax for new cars.) This is dangerous because car dealers would end up operating almost just like musical instrument dealers do now: limited choice, and very, very few 'bargains'.

[hollandog]

I went to Tesla store and enjoyed it a lot more than any dealerships.

Sir what are you driving?
What!? Time to trade it in man.
You're not ready to buy today? Alright take your time here. (Never comes back again)

[David70]

Originally Posted by Viffermike

Point 1: Based on NADA employment data, eliminating the new-car dealer system would kill more than 1.1 million jobs. Do you think any politician wants to be responsible for that?

Point 2: If you lose the dealer system, where are you going to be able to test drive new cars?

Point 3: If you lose the dealer system, where will you get your under-warranty car serviced for warranty repairs?

Point 4: If you lose the dealer system, what keeps car manufacturers from not disclosing their pricing and profit structure relative to the marketplace (i.e., competing makes and models)? They sure as heck don't do it now -- Tesla, in fact, is a great example of this. MSRP, which does this in a laissez faire open-barter market, would disappear because the price would no longer be suggested; it would be fixed.

Point 5: I'll equate this theoretical to something I'm very involved in: musical instruments. I play bass. Back in 'the day', one could 'test drive' many instruments on the market in brick-and-mortar music stores. Those have now largely disappeared; most of the only ones remaining are huge chains that control your access of makes and models -- and most of those are plebian makes that are not good bargains. For those who know their instruments and want to try the entirety of what's available out there, one has only three options:

1). Play instruments that other people own (friends, mainly). Yeah, right. Who's gonna let you drive their car to see if you want one for yourself?
2). Buy new instruments online until you find "the one". Who has the resources for that? If you don't like something, you have to sell it -- and almost certainly lose money on it -- then start over. Besides: Don't you want to know that a specific instrument is right for you before you shell out for one?
3). Buy used instruments online until you find "the one", then shell out for a new one that's yours and yours alone. This is what many musicians do. Basically, you have to buy something to try it out. It sucks. Imagine having to do that with cars, folks.

Seriously. Unless one of three things occurs, this will never happen:
1). The government mandates it, or
2). Vehicle manufacturers decrease to the point to where there are so few, the dealer system collapses and/or consolidates, or
3). Dealers themselves decrease in number, through attrition, mergers, or other purging, to the point where manufacturer representation isn't what would define individual dealers; breadth of stock would. (Think Carmax for new cars.) This is dangerous because car dealers would end up operating almost just like musical instrument dealers do now: limited choice, and very, very few 'bargains'.

The manufacturer could and should be allowed to handle all of the above if they want to go to market and sell/maintain their products and I don't agree with legislating sales channels. The overall system may or may not be better than it is currently is but we don't need politicians deciding the best way to buy and sell cars.

You would also be free to not go to the manufacturer owned stores.

Reality is if manufacturers took all of this over there wouldn't be nearly this many jobs lost. The cars still have to be sold, fixed, financed, etc.

[Msizzle]

Originally Posted by David70

The manufacturer could and should be allowed to handle all of the above if they want to go to market and sell/maintain their products and I don't agree with legislating sales channels. The overall system may or may not be better than it is currently is but we don't need politicians deciding the best way to buy and sell cars.

You would also be free to not go to the manufacturer owned stores.

Reality is if manufacturers took all of this over there wouldn't be nearly this many jobs lost. The cars still have to be sold, fixed, financed, etc.

ok but then its a dealership again, what makes you think who ownes it matters?? same expenses, same profit centers, same process

[RM7]

Originally Posted by Viffermike

Point 1: Based on NADA employment data, eliminating the new-car dealer system would kill more than 1.1 million jobs. Do you think any politician wants to be responsible for that?

Point 2: If you lose the dealer system, where are you going to be able to test drive new cars?

Point 3: If you lose the dealer system, where will you get your under-warranty car serviced for warranty repairs?

Point 4: If you lose the dealer system, what keeps car manufacturers from not disclosing their pricing and profit structure relative to the marketplace (i.e., competing makes and models)? They sure as heck don't do it now -- Tesla, in fact, is a great example of this. MSRP, which does this in a laissez faire open-barter market, would disappear because the price would no longer be suggested; it would be fixed.

Point 5: I'll equate this theoretical to something I'm very involved in: musical instruments. I play bass. Back in 'the day', one could 'test drive' many instruments on the market in brick-and-mortar music stores. Those have now largely disappeared; most of the only ones remaining are huge chains that control your access of makes and models -- and most of those are plebian makes that are not good bargains. For those who know their instruments and want to try the entirety of what's available out there, one has only three options:

1). Play instruments that other people own (friends, mainly). Yeah, right. Who's gonna let you drive their car to see if you want one for yourself?
2). Buy new instruments online until you find "the one". Who has the resources for that? If you don't like something, you have to sell it -- and almost certainly lose money on it -- then start over. Besides: Don't you want to know that a specific instrument is right for you before you shell out for one?
3). Buy used instruments online until you find "the one", then shell out for a new one that's yours and yours alone. This is what many musicians do. Basically, you have to buy something to try it out. It sucks. Imagine having to do that with cars, folks.

Seriously. Unless one of three things occurs, this will never happen:
1). The government mandates it, or
2). Vehicle manufacturers decrease to the point to where there are so few, the dealer system collapses and/or consolidates, or
3). Dealers themselves decrease in number, through attrition, mergers, or other purging, to the point where manufacturer representation isn't what would define individual dealers; breadth of stock would. (Think Carmax for new cars.) This is dangerous because car dealers would end up operating almost just like musical instrument dealers do now: limited choice, and very, very few 'bargains'.

I don't think we are necessarily advocating for the ending of dealers, but the ridiculous overlap and redundancy just drives up prices and cost and simply is a huge waste. Honestly, you are hoping the dealer has the exact model and trim in stock that you want to test drive. How likely is that? Usually not very IME, except for very high volume places in big cities, which would probably be improved by consolidating, so you don't have to drive 5 places trying to find the trim and options you want, to test drive.

And of course the biggest issue is how the auto makers and manufacturers have conspired to make it ILLEGAL in places to sell direct. That's the very opposite of competition.

[David70]

Originally Posted by David70

The manufacturer could and should be allowed to handle all of the above if they want to go to market and sell/maintain their products and I don't agree with legislating sales channels. The overall system may or may not be better than it is currently is but we don't need politicians deciding the best way to buy and sell cars.

You would also be free to not go to the manufacturer owned stores.

Reality is if manufacturers took all of this over there wouldn't be nearly this many jobs lost. The cars still have to be sold, fixed, financed, etc.

Originally Posted by Msizzle

ok but then its a dealership again, what makes you think who ownes it matters?? same expenses, same profit centers, same process

I already said it may or may not be better, the argument above was about changing the law to allow it and I think the manufacturers should be able to sell how they want.

Also, maybe they do become different where there are multiple service points around the city but only one main selling dealership (could also be a giant dealership). There are 5 Ford dealers within 10 miles of me, reality is people only care because they like to have service near them and Ford could drastically cut their costs by only having 1 full service dealer with service, sales, used, leasing, inventory and the 4 others could be simple service points (garages). No one really has an issue with driving 10 miles to buy a new car. Or maybe the other service points have a total inventory of 15 cars instead of 100, you can test drive and look at the basic models but go to the full dealership to find the exact one you want and deal with trade/finance/leasing.

Go to almost every medium sized town in the U.S. and there will be full dealerships only because the laws require it if they want to have any type of presence in these town, make it a service point only, then people will need to make a 30 minute trip to the full dealership to buy their car. Cost goes down with the overall smaller inventories held, sales people that are far better utilized (go to the average dealership on a week day and see how many have almost nothing to do), facility costs (buildings and land) are reduced, finance people are better utilized, the mega dealership can then afford to be a great experience with top notch facilities, people, etc. because of the volumes they are dealing with.

Lots of options if the laws didn't require the system to be exactly as it is.