I cannot wait until the day I do not have to step into a car dealer and deal with the slimiest of the slime and feel of taken advantage of.
I was for Chris Christie until he gave in to the lobbying of the car dealers and stopped Tesla from selling directly to the customer. The front end aggrandizing is great, but when you have the choice to help the consumer and you whiff, say good bye to support from me.
I am so opposed to walking into a dealership and buying anything that my last three vehicles were bought from private sellers on Craigslist. After the most recent crapped out, I gave up even on that and now use transit full time. The entire ecosystem around buying, owning, maintaining, and disposing of privately-owned automobiles is just...well, bad to me. And I'm tired of dealing with it so I won't. Instead, I give car2Go, ReachNow, and ZipCar around a hundred dollars per month, an insurance company under $20/month for a non-owner liability policy, and my employer gives me a transit pass as a benefit (though my household does have fare expenses for my spouse and kid).
(Offer does not apply to cities without a viable mass transit system. Your experience may vary. See a doctor for transit trips lasting more than four hours. Ticket vending machines on the upper level. Do not cross or stand in the roadway.)
Screw car dealers, screw them.
I'll also be happy when those eye sore dealer lots wither up. Nothing more hideous than gobs of cars packed together in sprawling lots with cars on ramps, gimmicky billboards, and massive light pollution at night.
> Legislatures want to open up markets for electric vehicles but are wary of undercutting dealers, which are local economic and political engines.
Which, if you think about it, means that the local community is overpaying for their cars, and this money funds the dealers. We're generally ok with middlemen taking a cut if they add value, but I don't know anyone who thinks car salesmen add any value whatsoever, they're just an annoying hindrance between you and the car you already researched and wanted.
If everyone was super happy about car dealers, allowing some manufacturers to skip the dealerships wouldn't be an issue, because people would still use the dealers for the value they add.
But people aren't, which is why only the dealers themselves, and the politicians they've bought are fighting to keep them around. Everyone else just wants them gone.
> He said he is relying on the Troy community and Ohio’s government to see the long-term affects of potentially losing the business. Arbogast employs 220 people in a city of 25,000. He also contributes to local churches and sponsors youth sports teams and schools.
If the dealer doesn't add any value, then this is essentially a tax on local car consumers, and those 220 employees are essentially on welfare. It's just all disguised as busywork.
But the difference is that all dealerships have artificially inflated prices, so if you live in a state with no direct to consumer sales you have no choice but to overpay which means there's no incentive to test drive at one dealership and buy at another, you're getting fucked either way. If direct sale is allowed the cars will be cheaper when bought from the manufacturer which is what creates the incentive to test drive at one place and buy at another.
Well, the Tesla model might be more appropriate in this day and age. They have small showrooms just to meet the demand of people wanting to test-drive, and then everything else about the sales process is done online.
This is obviously a more efficient process than large showrooms, large local inventory, and a large amount of pushy car salespeople whose only job is to get you to overpay for your vehicle to cover the costs of said showrooms and inventory.
My thought is having a dealer network is getting less useful for car makers. Historically dealers provided an interface between the car manufacturer and the end user in an era when.
1. Cars were a lot crappier than currently.
2. Shipping replacement parts was slow and expensive.
3. Communication was expensive, long distance calling, or slow, post.
4. Mass marketing was not fined tuned as now.
Dealers thus provided a service. They stocked parts performed quality warranty work. Sold and marketed the manufacturers cars.
Gasoline powered cars tend now to be very reliable, especially if you stick with manufactures that specialize in low cost of ownership cars. cough Toyota cough. The advent of electric cars will likely push reliability even further.
The other thing that's happened with cars as well is price transparency. Dealer could make work for themselves by specializing in getting better prices for the manufacturers cars then they could if they had a unified price list.
Could Tesla get an alliance with the manufacturers to bypass the cardealer scheme as a whole? I get manufacturers would rather see Tesla have problems, but wouldn't everone win with removing the middleman?
Or could Tesla, in their showroom, if they can't sell directly, let people preorder then redirect them to the cheapest local car dealer, in a sort of auction to the lowest margin, so cardealers are only seen as a commoditized cost?
It seems to be a recurring theme that policies meant to protect special economic interests from things like prices and competition might seem good in the short-term, but over time are bad for everyone. Except government seems to follow a law of bureaucratic entropy: policies, exceptions and departments are a lot easier to expand than take-back.
So if legislators with their car dealer friends ban Tesla from selling directly to consumers, could Tesla do something like "We'll pay for your flight out to nearest place you can buy a car and drive it home. You'll get free nice hotel stays on the way home?" I can see that for someone buying a Model S or Model X. The sale was not made in that state so it should be fine.
What would the states do then? I am guessing force buyers to pay a steep registration tax, but they'd just have to word in a very strange way. Can't people then just register the car quickly out of state and then re-register it locally so it looks like "a move" legally and not a sale? It seems for any trick these states can come up with, the other, Tesla friendly, states can come with an alternate trick to counter it...
> Can't people then just register the car quickly out of state and then re-register it locally so it looks like "a move" legally and not a sale?
Paying twice the taxes on a new car is not a cheap thing.
The states cannot prevent you from importing a car, but they can make it a huge pain in the butt. Multiple days of having to take off work, getting the run around and misinformation from bureaucrats, spending hundreds of dollars on fees and inspections to get to what is free if bought in-state. They can be very nasty about it.
(don't ask me how I know. This is based on personal experience)
How unpleasant it gets depends heavily on the state and how much of a vendetta key politicians will be willing to go on when they have a corporation thumbing their nose at their laws.
It's not just registration. Most people buy new cars on credit. Which means they don't have the title. You'll have to provide a out of state title, which you don't actually own, to the state. You'll need insurance that is accepted by the state and your creditor. You'll have to make sure that the insurance agency can communicate this correctly to the state and provide them the right information, or it may be multiple trips to government buildings until it gets sorted out.
And it's not like the state you are buying from is going to be all that happy about losing out of probably will amount to several hundred dollars in sales taxes.
Each of these things is just another thing to go wrong. Another day waiting in lines and getting bad information from people who would rather spit in your face then talk to you.
All of this stuff is very doable, of course. Probably take just a week or two of screwing around at the most, etc. And I am sure that Telsa would help streamline the process as much as possible, but they would still lose customers because of it. Getting dragged through the mud for what really is just a luxury car is nobody's idea of a good time.
Was wondering if Tesla perhaps can have a friendly state help out. Say Nevada for example exempts cars from a sales tax if it leaves the state within a week (they get revenue from say the plan being there so they "sponsor that industry...).
Perhaps some insurance company which operates in both states can partner with Tesla (not sure on legalities) of this and also a few online banks which would specialize in financing Teslas.
At least on the surface seems like there are a few opportunities there for other players to jump in and help...
I purchased a Toyota Tundra truck in Utah in 2007, and then drove it back to Arizona where I lived. The truck was new to the market and not available yet in AZ. The dealer had no problem whatsoever with titling the truck, financing it, and paying the taxes on it to Arizona and not Utah. It was very painless. The dealer told me that they do it all the time, and it was totally normal .
So my personal experience - easy, no problem. Only paid taxes to AZ, not UT. No lines, no DMV, no problem with registration, nothing. I just flew in, got the truck, drove home.
When buying a car from a neighboring state , it took only a quick call to my insurance agent at time of sale. The dealership arranged for the taxes and fees based on my state of residence, not the state of sale.
I hadn't considered paying people to fly out, good idea PR wise.
I was thinking more just refusing to sell to any dealership in a state that doesn't allow Tesla to make their own. That way no new sales of Teslas would happen in that state and Tesla could show stats from their stores in neighboring states near the border showing how many people from the Tesla prohibition state are crossing over to buy. Considering this is one of those black and white cases where one side of the legislators(those who oppose direct to consumer sales) are against it for purely corruption reasons, it should take long or be hard to get the public to turn on the idea and demand the law act in the interest of the people as opposed to artificially jacking up prices for kickbacks.
Then again they could just set the price for their cars at one value that they will sell it for in all of their direct to consumer dealers. They should then make ads using this value so that everybody knows damn well that the latest Tesla costs $X. Then they could simply work with the middlemen dealerships but jack up the price they sell to the dealership for so that the dealerships have to charge a very noticeable amount more than $X. Then everybody sees the ads, which btw should mainly be played in states that are fighting Tesla and realize the dealerships are screwing them. Imagine seeing ads that clearly say a big mac is $2 yet when you go it actually cost about $3.50 in your state because your gov't gets kick backs from big beef to have a law that keeps it that high. Again the public will turn since they want the cheap Teslas that come from the official source rather than the expensive ones from some worthless middleman.
Which strategy is better I don't know for sure, but the former is what I hope they do, it seems more respectable and more effective since in the second way the corrupt states still get some revenue from the overpriced sales.
I don't think any state's tried to do that. What they're trying to ban are Tesla-owned showrooms and repair centers. And that's even though Tesla actually sells over the Internet - if you buy in a showroom, it's because you borrowed their iMac to order from the website.
Personally I will not miss the car dealer trying to pull every stunt on the planet to get me committed (having you wait around "We're trying the find a car for you", the "I want to help you, but I need to convince my boss", mingling the trade-in with the new price, etc, etc).
I have yet to see a single car purchase where the dealer added any value whatsoever instead of just being a nuisance in the way to buying a car.
Of course they are afraid. They should be. Deep down they know they're not needed.
>Personally I will not miss the car dealer trying to pull every stunt on the planet to get me committed
I think this is a relic of the past. My last two car purchases have been straight forward: I walked in and told them what I was willing to pay for the car. One dealer couldn't do it, another could. In fact, this dealer showed me their little spreadsheet of costs associated with the car and said, "This is what we'll make on this car at this price. If I go any lower than this it is no longer worth it for us to sell to you." I make the purchase and pick the car up the next day. The car dealer business is pretty competitive, at least where I live.
There is so much information available to consumers that there's no longer any reason for the process to be very complicated or opaque. Sure, you might not want to "negotiate", but then you're welcome to go pay retail ("sticker price") like you would anywhere else, including Tesla. If you do that you'll be out of there in a heartbeat at that price (and the dealer will love you).
I don't car what happens to car dealerships, honestly. I just don't find them to be such a problem.
I think the idea there was supposed to be that if no "negotiation" occurred for most sales (either dealerships reformed or they were replaced with direct manufacturer sales) and everyone paid "sticker price", then manufacturers would start to compete more on price, thus reducing the overall price and margins of vehicles in the long run.
Also, how come you didn't drive out if the dealer with your new vehicle that same day?
Exactly. There is little incentive for them to compete on price when they can instead play games with it due to information asymmetry and sales tactics.
A friend of mine does this when he needs a new car:
He goes to 3 dealerships in this vicinity, tells them exactly what car he wants to buy with the exact extras, asks them for their best price, and let's each know he's going to two other dealerships. Then he leaves his phone number and walks out.
The thing is, dealerships have incentive to keep dealerships in general in business, and they likely all know each other, so they probably won't undercut each other by a large margin. Since they all know the actual cost of the thing you're wanting to buy, dealership A gives you a price maybe a few hundred below dealership B even though it's a few thousand above what their actual cost is.
Consider how much prime real estate dealerships sit on, how many employees they have, and how many units they sell per day which must pay for the aforementioned items with their mark-up, and still turn a profit at the end of the day. Now consider how much less expensive every car would be if they didn't have those additional costs, and consider if the benefits a dealer adds are worth those costs. IMO factory-direct sales can't come soon enough.
As somebody with a scumbag relative who works at a dealership I can tell you that spreadsheet was fake. Very common tactic among the ethically deprived.
Have AAA deal with things. You'll be told where to get your car, with a pre-defined low markup. You walk in, sign the papers, maybe wait for title (depends on state law), and then off you go.
The idea of walking into a dealer and driving off with a new pre-built vehicle from a lot where someone else chose all the equipment, color and trim, is dead. It's more or less gone in Europe since a long time ago, and the cost of having stocks of cars of older models being sold out is just too big. In Europe brand dealerships are showrooms for the latest models, little more. Obviously these showroom dealers get a cut of the profits (you buy it from them, not from the manufacturer directly, but it's built to order), but they make most of their money from aftermarket service and used car trading in the same brand. You test drive, make the hundreds of choices, and get the car in 1-3 months. If you want a car directly, get one of the used ones.
There is a lot of inertia in the US but it will be the same there.
I don't understand why dealers are upset with someone selling something directly to the customer? Apart from lobbying and inertia, are there any legitimate reasons for protecting these businesses from change?
Heh, I live near Troy, Ohio, so I see that Arbogast dealership all the time. I don't have anything against them personally, but I'd love to see a Tesla showroom pop up here in town. (Mostly for looks, though. I've never bought a brand new car myself and don't expect that to change any time soon.)
> But it is not yet clear that the disruption of the auto industry will lead to the shuttering of dealerships the way digital sales of music and books led to the death of record stores and bookstors.
This is a completely unfair comparison. Book and music stores were everything dealers were not. They had marked and easy to understand prices. They were knowledgable and interested in spreading knowledge about their product. And they were very low pressure. They just couldn't compete on price.
Dealerships can go burn in a fire as far as I'm concerned. They hustle you with information asymmetry and use high pressure sales tactics. And they provide no value for information or knowledge. They exist solely to skim as much money as possible from a sales transaction that they provide no value to.
Has anybody peeked into dealership metrics to find any biases in prices in different racial, income, gender, introvertedness, or any other demographics? It seems like haggling could be a gaping hole in how fair a car sale is to different people.
40 comments
[ 2.6 ms ] story [ 92.9 ms ] threadI was for Chris Christie until he gave in to the lobbying of the car dealers and stopped Tesla from selling directly to the customer. The front end aggrandizing is great, but when you have the choice to help the consumer and you whiff, say good bye to support from me.
(Offer does not apply to cities without a viable mass transit system. Your experience may vary. See a doctor for transit trips lasting more than four hours. Ticket vending machines on the upper level. Do not cross or stand in the roadway.)
I've been looking for one of these, but everywhere I could find was much more expensive than this.
I would love to see this covered as, "...persuading an increasing number of states to not prohibit it..."
Which, if you think about it, means that the local community is overpaying for their cars, and this money funds the dealers. We're generally ok with middlemen taking a cut if they add value, but I don't know anyone who thinks car salesmen add any value whatsoever, they're just an annoying hindrance between you and the car you already researched and wanted.
If everyone was super happy about car dealers, allowing some manufacturers to skip the dealerships wouldn't be an issue, because people would still use the dealers for the value they add.
But people aren't, which is why only the dealers themselves, and the politicians they've bought are fighting to keep them around. Everyone else just wants them gone.
If the dealer doesn't add any value, then this is essentially a tax on local car consumers, and those 220 employees are essentially on welfare. It's just all disguised as busywork.
This is obviously a more efficient process than large showrooms, large local inventory, and a large amount of pushy car salespeople whose only job is to get you to overpay for your vehicle to cover the costs of said showrooms and inventory.
1. Cars were a lot crappier than currently. 2. Shipping replacement parts was slow and expensive. 3. Communication was expensive, long distance calling, or slow, post. 4. Mass marketing was not fined tuned as now.
Dealers thus provided a service. They stocked parts performed quality warranty work. Sold and marketed the manufacturers cars.
Gasoline powered cars tend now to be very reliable, especially if you stick with manufactures that specialize in low cost of ownership cars. cough Toyota cough. The advent of electric cars will likely push reliability even further.
The other thing that's happened with cars as well is price transparency. Dealer could make work for themselves by specializing in getting better prices for the manufacturers cars then they could if they had a unified price list.
Or could Tesla, in their showroom, if they can't sell directly, let people preorder then redirect them to the cheapest local car dealer, in a sort of auction to the lowest margin, so cardealers are only seen as a commoditized cost?
What would the states do then? I am guessing force buyers to pay a steep registration tax, but they'd just have to word in a very strange way. Can't people then just register the car quickly out of state and then re-register it locally so it looks like "a move" legally and not a sale? It seems for any trick these states can come up with, the other, Tesla friendly, states can come with an alternate trick to counter it...
Paying twice the taxes on a new car is not a cheap thing.
The states cannot prevent you from importing a car, but they can make it a huge pain in the butt. Multiple days of having to take off work, getting the run around and misinformation from bureaucrats, spending hundreds of dollars on fees and inspections to get to what is free if bought in-state. They can be very nasty about it.
(don't ask me how I know. This is based on personal experience)
How unpleasant it gets depends heavily on the state and how much of a vendetta key politicians will be willing to go on when they have a corporation thumbing their nose at their laws.
It's not just registration. Most people buy new cars on credit. Which means they don't have the title. You'll have to provide a out of state title, which you don't actually own, to the state. You'll need insurance that is accepted by the state and your creditor. You'll have to make sure that the insurance agency can communicate this correctly to the state and provide them the right information, or it may be multiple trips to government buildings until it gets sorted out.
And it's not like the state you are buying from is going to be all that happy about losing out of probably will amount to several hundred dollars in sales taxes.
Each of these things is just another thing to go wrong. Another day waiting in lines and getting bad information from people who would rather spit in your face then talk to you.
All of this stuff is very doable, of course. Probably take just a week or two of screwing around at the most, etc. And I am sure that Telsa would help streamline the process as much as possible, but they would still lose customers because of it. Getting dragged through the mud for what really is just a luxury car is nobody's idea of a good time.
Was wondering if Tesla perhaps can have a friendly state help out. Say Nevada for example exempts cars from a sales tax if it leaves the state within a week (they get revenue from say the plan being there so they "sponsor that industry...).
Perhaps some insurance company which operates in both states can partner with Tesla (not sure on legalities) of this and also a few online banks which would specialize in financing Teslas.
At least on the surface seems like there are a few opportunities there for other players to jump in and help...
So my personal experience - easy, no problem. Only paid taxes to AZ, not UT. No lines, no DMV, no problem with registration, nothing. I just flew in, got the truck, drove home.
I was thinking more just refusing to sell to any dealership in a state that doesn't allow Tesla to make their own. That way no new sales of Teslas would happen in that state and Tesla could show stats from their stores in neighboring states near the border showing how many people from the Tesla prohibition state are crossing over to buy. Considering this is one of those black and white cases where one side of the legislators(those who oppose direct to consumer sales) are against it for purely corruption reasons, it should take long or be hard to get the public to turn on the idea and demand the law act in the interest of the people as opposed to artificially jacking up prices for kickbacks.
Then again they could just set the price for their cars at one value that they will sell it for in all of their direct to consumer dealers. They should then make ads using this value so that everybody knows damn well that the latest Tesla costs $X. Then they could simply work with the middlemen dealerships but jack up the price they sell to the dealership for so that the dealerships have to charge a very noticeable amount more than $X. Then everybody sees the ads, which btw should mainly be played in states that are fighting Tesla and realize the dealerships are screwing them. Imagine seeing ads that clearly say a big mac is $2 yet when you go it actually cost about $3.50 in your state because your gov't gets kick backs from big beef to have a law that keeps it that high. Again the public will turn since they want the cheap Teslas that come from the official source rather than the expensive ones from some worthless middleman.
Which strategy is better I don't know for sure, but the former is what I hope they do, it seems more respectable and more effective since in the second way the corrupt states still get some revenue from the overpriced sales.
What could they possibly do to ban internet sales?
I have yet to see a single car purchase where the dealer added any value whatsoever instead of just being a nuisance in the way to buying a car.
Of course they are afraid. They should be. Deep down they know they're not needed.
I think this is a relic of the past. My last two car purchases have been straight forward: I walked in and told them what I was willing to pay for the car. One dealer couldn't do it, another could. In fact, this dealer showed me their little spreadsheet of costs associated with the car and said, "This is what we'll make on this car at this price. If I go any lower than this it is no longer worth it for us to sell to you." I make the purchase and pick the car up the next day. The car dealer business is pretty competitive, at least where I live.
There is so much information available to consumers that there's no longer any reason for the process to be very complicated or opaque. Sure, you might not want to "negotiate", but then you're welcome to go pay retail ("sticker price") like you would anywhere else, including Tesla. If you do that you'll be out of there in a heartbeat at that price (and the dealer will love you).
I don't car what happens to car dealerships, honestly. I just don't find them to be such a problem.
Also, how come you didn't drive out if the dealer with your new vehicle that same day?
He goes to 3 dealerships in this vicinity, tells them exactly what car he wants to buy with the exact extras, asks them for their best price, and let's each know he's going to two other dealerships. Then he leaves his phone number and walks out.
Has worked the few times he did it so far.
Consider how much prime real estate dealerships sit on, how many employees they have, and how many units they sell per day which must pay for the aforementioned items with their mark-up, and still turn a profit at the end of the day. Now consider how much less expensive every car would be if they didn't have those additional costs, and consider if the benefits a dealer adds are worth those costs. IMO factory-direct sales can't come soon enough.
Remember "Confessions of a Car Salesman"?
https://news.ycombinator.com/item?id=8824544
https://news.ycombinator.com/item?id=3779735
(Article is gone, but word doc here: http://comp.uark.edu/~lmeade/Communication/persuasion_files/... )
Some update for 2009: http://www.naltblackchurch.com/finance/pdf/ConfessionsOfACar...
There is a lot of inertia in the US but it will be the same there.
I don't understand why dealers are upset with someone selling something directly to the customer? Apart from lobbying and inertia, are there any legitimate reasons for protecting these businesses from change?
Schedule an appointment at the genius bar for your vehicle?
This is a completely unfair comparison. Book and music stores were everything dealers were not. They had marked and easy to understand prices. They were knowledgable and interested in spreading knowledge about their product. And they were very low pressure. They just couldn't compete on price.
Dealerships can go burn in a fire as far as I'm concerned. They hustle you with information asymmetry and use high pressure sales tactics. And they provide no value for information or knowledge. They exist solely to skim as much money as possible from a sales transaction that they provide no value to.