>[In the only two stores, both in New Mexico,] under an agreement with the tribal government, Tesla will train tribal members to serve as service technicians.
We've already seen reservations try to legalize marijuana only to basically be shot down by the state/federal government. Tribal sovereignty has always been a thorny issue.
It's actually quite interesting. I don't know of many cases where regional autonomy (tribal or otherwise) actually becomes sovereignty.
There's a small uncontacted tribe living on an island in the Indian ocean that legally is a part of India. However, the govt does not attempt to enforce the law and in fact actively prevents people from reaching the island.
India claims sovereignty over the Andaman Islands including the Sentinel Islands. Just because the islanders don't know/refuse to engage with the state doesn't stop the state from asserting their claim.
Although, there are entities that are de facto sovereign and even have had the wherewithal to keep it with arms. Myanmar is home to more than one of these, actually. There's the Shan State (https://en.wikipedia.org/wiki/Shan_State), and within their de facto sovereign areas there are pockets of smaller administrative units that are armed and are also de facto sovereign, accepting nominal de jure Burmese authority over the authority of the nationalist minority independence movements, such as the Wa State with (https://en.wikipedia.org/wiki/United_Wa_State_Army). Alas, the tribes here in the US don't quite have that kind of firepower, nor the desire to refight the latter half of the 19th Century.
That's not to say that the relationships between tribes, the federal government, and state governments is any less complicated and at times contentious. The Supreme Court tends to favor tribal sovereignty as almost akin to that of a state, but not in all circumstances and where "full faith and credit" ends when it comes to tribal judicial authority when it comes to civil matters seldom actually represent actual "full" anything. Although tribes do have sovereign immunity so without congressional approval one can't simply litigate out every issue by suing the tribe, so the ambiguities are likely to persist.
Not even sure why this comment/thread is flagged. More flagging abuse.
My understanding is that now, in the US, due to a court decision being overturned, abortion is now seen as a state issue.
This means that if Tesla dealerships are an option, so are abortion clinics, to bypass state law.
I don't think drugs are, at least not completely, but car dealerships are seen as under the authority of the state.
All it takes, is eroding the rights of tribal land, beneath that of the state, instead of equal to/immune to, and Telsa's plan won't fly.
If I was GM, or Ford, or what not, I'd backdoor fund an abortion clinic on tribal land, then use that poliical pressure to pass laws, which would stand for years, at least, until being struck down.
Once tribal land no longer has the power to flout state law, bam, no more Tesla problem for Ford or GM.
Americans in the room: stop getting all emotional, and flagging things which meet your "us vs them" political blather, and start examining the implications instead.
Even if the above "sneaky corporate play" is not the outcome here, this move by Tesla made me realise, a reservation is the a place where abortion clinics may fight the next battleground.
I don't particularly like tesla, much less musk, but this just seems like a win-win. Dealerships are a middleman much more deserving to be ruthlessly demolished by "tech disruption" than, say, journalism. It's fascinating, and frankly suspicious, that they're still in business and thriving, given their value proposition in today's world.
What's so bad about American dealerships? Here in Europe I've never heard anyone complain about them. They just provide a service - they have cars available to test drive and have a real person to talk to during the purchase. Sure, the owners make profit, but they DO provide value for the customer and they're at mercy of the car company, which means, in bad economic times, they can get squeezed pretty hard. How is it different in the US?
I’ve bought vehicles at both US and EU dealerships; the EU sales process was; they showed me the vehicle I had seen on their website, we drove the car, then we haggled a bit and signed contracts. US sales process was much more akin to how I imagine time share sales scams work - when you think you’re done, the gauntlet of high pressure multiple-rooms-with-increasingly-“senior”-managers has just started.
It took nearly two hours of people telling me I was an idiot for not taking the extended leather steering wheel warranty etc before getting out of there.
Both of these experiences were at official Hyundai dealerships.
Interesting. I've only bought car in EU (in Mitsubishi dealership in Poland) and it was BY FAR the best customer service I've received in my life. The salesman was thoughtful, listened to me carefully, knew the product well, didn't try to push anything on me. It was pure pleasure. I was kind of sad that one has to spend $15k in order to warrant a customer experience this good.
Hyundai dealership in Norway: Came to check the car in person and to ask couple of questions. Without any pressure dealer asked me if I wanted to take it for a ride. I agreed reluctantly, expecting that he will be joining. Nope, he just handed me the keys and asked to take a picture of my driving license. I loved the experience so much I ended up buying the car on the spot.
> expecting that he will be joining. Nope, he just handed me the keys and asked to take a picture of my driving license
To be fair, this was my experience buying a Subaru in Wyoming. The paperwork was then signed, I pushed back on one or two fee line items, they were removed with apologies and I was offered a beer.
I bought a new subaru in wyoming with a personal check and my address registered to general delivery with a similar experience. I was so surprised they didn’t make me get a cashiers check or verify the check.
I did later get screwed by the dealership when I was tired of doing my own maintenance after having replaced the timing belt on my truck and let the wife take it in for service and they literally replaced every fluid in the vehicle including brake fluid on a 2 year old vehicle, a $900 service.
in my experience almost all dealers take personal checks, they can get the car or money back from you pretty easily if there is a problem with the check
I have only experienced the US version firsthand, but hearing from EU friends, it seems the EU prices are more-or-less set in stone and the haggling potential in the US can get you a better deal if you are savvy and patient (and then say no at every “value-add”).
Of course that comes at the cost of customer experience.
There are 2 types of dealers in the US. Lowest price advertised volume dealers who will never give you the advertised prices because you’d have to be a Veteran/new College grad/AARP member and use their shitty financing just to qualify.
The other dealers focus a little more on the experience and will haggle a bit with you. They usually don’t use high pressure tactics but won’t give you the lowest price.
I called 15 dealerships asking about their best price out the door "RIGHT NOW" for specific VIN numbers they had on the lot and only had to yell at one salesperson. Once I got dollar figures, at each generation of the binary search I would call and ask if they could beat the lowest price of the prior generation. In the end I paid well under MSRP for that particular trim level and model.
I wish I had your patience, but I just don't. I find the entire process so insulting to my time and intelligence that I refuse to participate, especially after spending 6 hours -- 6! -- buying a specific EV in the Bay Area.
I also find the personalities of used car salesmen to be so grating that I'd rather do it all over email.
Like the other poster said you can deal completely online/over the phone with the dealers internet sales team. I called around for my wife’s car but they would only come down $500 so we went with the original dealer to avoid wasting time.
Prior to 2020 this was true; I think I got around 13% off my last new car. However since the pandemic shortages and with manufacturing delays, there is much less flexibility as the dealerships know the cars are going to sell either way. When I went to test drive a car recently I saw a couple getting a flat denial on any discount even after attempting to haggle.
I’ve bought 4 US cars (not by choice!) in the past 5 years and every single time it’s like your EU experience. 3 of the times I just shut the finance guy down immediately about the warranty crap. I already know the exact car plus options I want and how many other dealerships in the East Coast have them.
Ordering a BMW was an even more pleasant experience and haggling for 6% off was easier than when I did it with my Jeeps.
These facts paint a pretty obvious picture of why car buying is a much more pleasant experience for you than most: you have experience, you have options, you don't have a lot of patience, and you are willing to loudly signal those things "immediately," leaving no metaphorical door open for a metaphorical foot to slide into.
If someone else is reading this it's worth taking into account when you deal with a higher ticket item than you usually would: in those situations, being polite is a huge disadvantage and a good salesperson will take a mile for every micrometer you give them.
My wife got the BMW and I got 2 Jeep Grand Cherokees. I also helped buy a Toyota. I think the Jeep guy played more games but it was still less than 1 hour from test drive to price agreement.
Ah but you're doing it backwards. Signal that you're a sucker for big insurance packages and they'll lower the price of the vehicle to ensure they get that juicy warranty deal from you. Only then do you change your mind and decide that you don't actually need it.
This doesn’t work because they just go back and change the price to the original higher MSRP.
What you have to do is agree to financing (with no prepayment penalties) in exchange for a discount, and then, before you get the first bill you pay the car off in full.
In my early 20's, I briefly considered getting a new car, or maybe leasing.
Insurance would have been more than the monthly car payment, and when I expressed that $400/mo wasn't awful, but $1,000/mo for a car was a non-starter, the guy was seriously like "Well, do you want to eat food, or have a car (with lighted cup holders) to get to work?" and "If you can't afford rent, you can sleep in the car!"
That's still one of the dumbest conversations I've ever had.
> US sales process was; they showed me the vehicle I had seen on their website, we drove the car, then we haggled a bit and signed contracts. US sales process was much more akin to how I imagine time share sales scams work - when you think you’re done, the gauntlet of high pressure multiple-rooms-with-increasingly-“senior”-managers has just started.
So basically: it's a culture thing. High pressure tactics are entrenched on the sales culture side, and the customer culture has gotten used to tolerating them.
As an aside, IIRC, someone once told me that Japanese makeup is superior to and cheaper than Western makeup, because Japanese customers are picky and won't put up with less.
The concept of dealerships makes some sense to me: an individual retail customer has zero leverage with a mass market manufacturer, but they'll have more leverage with a smaller dealer, and the dealer will have more leverage with the manufacturer because they're buying far more than a single person. Though the actual implementation leaves a lot to be desired.
In general dealers are relentless in maximizing their profit on each deal and turn the negotiation into an all-day grind of dealing with overpriced unnecessary add-ons and inflated financing rates. Dealer employees are not employed by the OEM so they don’t care how much damage they do to the OEM’s brand with their tactics.
They are middlemen adding very limited value. It's not nothing; but maybe also not the thousands of dollars of a cut that they take. The fact that they need protectionist measures like state legislation to prevent competition that simply cuts out the middle man, kind of proves that. It's more of a tax than a value add.
Tesla organizes test drives too. And you can bring your Tesla in for maintenance (well not in these states obviously). So, it's not like you don't get any service.
It's the protectionism that is bad. Without it, more manufacturers would cut out the middle man and sell directly. Because why give that big of a cut to a middle man you don't need?
American dealerships(only ones I’ve dealt with) make a lot of their money on the auxiliary purchases, so they keep you in rooms, passing you around managers to try to get you to buy these things(extended warranties, extra options, tire changes, yadda yadda). They are also pretty difficult to negotiate with.
The service they offer is convenience and possibly peace of mind(over an owner sale), but they sure do take an arm and a leg for it.
For those in the US considering purchasing the manufacturer warranty coverage (“bumper to bumper”), you can often purchase the same coverage from a different dealer from the one selling the car (whoever offers the best price).
Just call a dealers finance department and find out if they sell standalone warranty and get a quote (you may need to provide a sample VIN). Make sure they are quoting the official manufacturer warranty coverage (new car) vs some BS third party warranty.
If you do this in advance you can fight off the finance guy easily and (more often) get them to price match to keep your business. This method has saved me thousands.
Yes, having competitive alternatives in hand is a great bargaining chip, and always giving yourself the option to just get up and walk away. Problem is people get to the dealership and fall in love with the car and all sense goes out the metaphorical window.
true, they will definitely try FOMO tricks to get the sale instantly, and the above assumes there is research prior to going in and a desire to save $.
knowing that warranty can be purchased separately for brand itself is a great way to beat up the finance guy, as that may be where they expect to make the bulk of their profit (although nowadays it may be “market adjustment” and other BS fees)
Whether they provide value is kind of irrelevant, because one (at least in the US) _has_ to go through them. Is their markup equal to the value they provide? We'll never know, because we can't choose to not go through them.
If I want to place an order for a vehicle (not buy one off their lot), the dealer does nothing but still makes a cut.
Not to mention, the majority of folks selling cars (even new cars) are some of the slimiest you'll meet. They are masters of manipulation.
P.s. example of manipulation: some years back I bought a used Honda Civic. The 4th person I got passed to made sure to tell me "the civic is the most stolen car in the US", while trying to sell me on some aftermarket alarm system. I of course knew this was an intentionally misleading statistic, but I'm sure many folks could fall for it.
> Whether they provide value is kind of irrelevant, because one (at least in the US) _has_ to go through them. Is their markup equal to the value they provide? We'll never know, because we can't choose to not go through them.
> If I want to place an order for a vehicle (not buy one off their lot), the dealer does nothing but still makes a cut.
I'm pretty sure this is the same in Europe, or at least in France. Even if I wanted to buy a local make, say a Renault, I don't know how I'd go about getting in touch with the manufacturer directly instead of going through a dealership.
Now I've never actually bought a new car, only motorcycles. And even though it's the same process (I don't think I can order a Honda nor a BMW "direct"), the dealerships didn't try to make me buy useless options.
>I'm pretty sure this is the same in Europe, or at least in France. Even if I wanted to buy a local make, say a Renault, I don't know how I'd go about getting in touch with the manufacturer directly instead of going through a dealership.
The difference is that manufacturer-owner dealership is basically not an option in US.
My local Toyota dealership is owned by Toyota. Some other ones are just "licensed" to be their official dealerships, so not owned by Toyota.
In US the "licensed" one can decide "well, the car is rare" (and in pandemic that was every car), here is extra 10-20% dealer markup just because we can. In EU, customer would just go to official Toyota one that doesn't do shit like that
I'm pretty sure you can buy both Volkswagen and BMW direct if you go through their website. Honda meanwhile seems to refer you to a dealership.
Volkswagen even offers you the option to fetch your vehicle from their factory in Wolfsburg (tour included, drinks cost extra) instead of having it delivered.
> Whether they provide value is kind of irrelevant, because one (at least in the US) _has_ to go through them. Is their markup equal to the value they provide? We'll never know, because we can't choose to not go through them.
To me this is a bogus argument because with Tesla you don't have the other option. Well, you kind have it but Tesla showrooms/service centers are usually a shitty experience in terms of "a salesman caring for you".
Anyway, I'm from Europe and I guess that the car dealership experience is pretty different (I know the US ones just by movies and Monkey Island)
Sure, you don't have any other option, but it's their product anyway. You're already saying you want something from them.
Also, my experience at Tesla dealerships has been the best of any dealership (and keep in mind I'm not a musk apologist (quite the opposite), nor own or plan to own a Tesla). They literally give you the keys and let you drive around by yourself, no questions asked. The experience is lower stress than buying a pair of shoes.
I haven’t found a good, well-referenced article on this topic, but the short version seems to be lobbying of state governments by car dealers back in the 1930s, and continued lobbying since.
Incumbent car manufacturers had no particular incentive to upset the applecart, but Tesla had the opportunity to see how insane it was.
Interestingly, BYD has chosen a direct to consumer model here in Australia (if you haven’t heard of them, you soon will). Mercedes has now switched to an agency pricing model where the dealers sell on commission and don’t own the cars, so Mercedes can legally control the retail price.
The first time I realized I have to pay sales tax if I sell a used car in the US, big wtf moment. Dealerships don't. I think. A sane tax framework avoids re-taxing products on the second hand market.
Is the idea of making a car then selling it directly to someone who wants it so strange?
There is some serious pretzel-thinking going on here somewhere in the halls of power (pretzled, one assumes, by careful application of money). The idea that there needs to be a middle-man is weird. The people who want one less layer of abstraction don't need to justify themselves, the dealers have to be doing a lot more than being not-so-bad to justify a mandatory role in the process.
> "The big achievement, instead, was making direct-to-consumer car sales possible."
This isn't the biggest problem America faces, but the idea of a business needing to "innovate" to sell its product to consumers has to be the most unAmerican sentences I've read in an article. It is hard to get a more petty strike in against capitalism.
Here (in EU) we have anything from manufacturer-led dealership to entirely independent one.
But there laws that make it basically forbidden for manufacturers to sell directly and have a lot of protection for dealerships business. Hence no competition. That was made into slapping extra price over MSRP on rarer cars there. That practice started spanning pretty much all cars during pandemic.
They only exist because it's illegal to do business directly with the consumer. Had they been needed by the customer, they wouldn't fight tooth and nail to keep those laws
Many brands learned, the hard way, that clients watch on internet but don't buy a new car by internet. Is a too expensive investment. Most people refuse to talk with a robocall and want a local dealership where they can return if they have troubles.
Brands are always trying to reduce the number of official dealerships, to discover later that their business has run dry, and are about to be eaten by a bigger brand. Is happening all the time.
And again, if it was all down to either consumer or manufacturer preference, they wouldn't so heavily lobby for laws that require all transactions to go through the dealerships.
I bought a car last year during the covid induced car shortages. The first visit to the dealer, I said what I wanted, he went to the back and got a piece of paper with a price and a VIN number, the price matched what the Toyota website said, and I agreed to put down a deposit. The next visit 3 weeks later, I saw the car I was promised, the dealer told me the price which matched the sheet. He gave me the keys for a totally private test drive (he didn’t even come along) and I proceeded to hand over the check and was sent on my way as soon as the DMV paperwork was fulfilled. It was a Toyota dealership in California. They’re not all rotten. I’d happy buy another car from the same salesperson if I was in the market. If I had to guess, dealerships that do fleet sales have less pressure and can treat normal consumers with proper respect.
Virtually every dealer, for the Japanese brands I am considering, is 2 to 10K+ over MSRP (“market adjustment and dealer adds”) in a 300 mile radius (multiple big metros). These markups are for vehicles they won’t have in stock for months also.
Car dealers have discovered they can make huge profits by exploiting the inventory shortage. They’ve also kept some of the most arrogant sales staff (“closers”) who are guaranteed big pay days for every sale.
While this isn’t always the case, the days of paying below MSRP appears to be a thing of the past
Had a similar experience a few weeks ago, for example a $25,000 Hyundai Elantra was marked up $8,000 over MSRP. All the Hyundai dealers near me are all pulling the same games and don’t post the actual price on their website so you have to waste time traveling there. Luckily for me I had the option to buy out my lease and won’t ever do business with any of these dealers again.
I came across https://markups.org, in my research, which crowdsources info on dealer markups. It will give you a ballpark if a dealer should be avoided outright.
Calling the sales department and asking for market adjustment and dealer adds info for make/model is also recommended. Most sales people, although not all, will disclose rough numbers.
This summer we looked at a Toyota. They were 8 months out on deliveries but if we bought $1500 worth of dealer prep/warranty we could reserve our car.
We went to Honda instead, and paid MSRP. They were only 3 months out, but nobody above us in line wanted the color of the next one that came in so we got it in a month.
Dealerships in the US make a lot of money by convincing people to take bad deals. They're known for being sleezy and exploitative by default, as the model encourages that.
A lot of people want to be able to buy a car the way they buy almost any other consumer product: easily, for a set price they can research ahead of time. Dealerships stand in the way of that.
I think that’s limited to lower end brands and the “sells any brand” dealership. My experience with luxury dealership has been nothing but positive. Yes, you still have to negotiate, but they won’t spring shady deals from random banks or tack on unnecessary “dealer fees”. Even when buying used cars, I go to name brand dealerships for a more predictable experience.
AFAIK, they eventually want to provide "Model 2" for about 60-70% of Model 3 price. They need to scale up their whole operations to be able to profit off of that.
Yes, they probably want that. And they also want pie in the sky.
The Model 3 was launched in July 2017, about 5.5 years ago. Unveiling in April 2016, more than 6.5 years ago. During the unveiling, if I'm not wrong, they announced the $35k Model 3. In 2019 they actually released the $35k Model 3, as more of a publicity stunt, since they pulled it after only 2 months.
Back then €1 was about $1.2, so that price would have been about €24k.
Instead, in the real world of today, where €1 is less than $1, the cheapest Model 3 you can buy in Europe is about €54k.
So at the new exchange rate, it's more than twice as expensive, and even with the old exchange rate, it would have still been $45k (about 30% more expensive).
So the "Model 2" will actually be around the price that was promised for Model 3.
More than that, Tesla is notoriously unreliable regarding forecasts. At this point I don't think the Model 3 will ever be back to $35k/€35k.
And this new "Model 2" will probably be launched 10 years from now and it will cost what the Model 3 was supposed to cost, back in 2017.
I don't know about you, but I don't make my plans around stuff that takes 15 years to be ready (5.5 years until now + the likely 10 more years it takes them to launch it).
>Yes, they probably want that. And they also want pie in the sky.
That was being said about literally every Musk venture, either failed or successful.
>The Model 3 was launched in July 2017, about 5.5 years ago. Unveiling in April 2016, more than 6.5 years ago. During the unveiling, if I'm not wrong, they announced the $35k Model 3. In 2019 they actually released the $35k Model 3, as more of a publicity stunt, since they pulled it after only 2 months.
>Back then €1 was about $1.2, so that price would have been about €24k.
>Instead, in the real world of today, where €1 is less than $1, the cheapest Model 3 you can buy in Europe is about €54k.
>So at the new exchange rate, it's more than twice as expensive, and even with the old exchange rate, it would have still been $45k (about 30% more expensive).
Blame ECB (for currency value drop) and supply and demand. Turns out enough people want to buy 35k€ vehicle for 54k€.
>And this new "Model 2" will probably be launched 10 years from now and it will cost what the Model 3 was supposed to cost, back in 2017.
Yeah, but who cares? The purchasing power of that will be equal to what it would have cost based on original estimates.
Yes, but this is only your projection, not a fact. Purely based on last 2 years of pandemic and extreme supply disruption, combined with wars and other geopolitics dangers.
I'm don't get why people care about market cap, but for what it's worth, tesla sits at about 2-3x those two companies combined. And panasonic is "just" a 20 billion dollar market cap company.
Why do people care about market cap? Because it shows mindshare. It shows what people care about and where investments should go, preorders, a lot of that stuff.
Plus market cap can be converted into money (not 1:1, but still).
Luxury options are by design "worse deal" - the margins on core product are way higher, so they don't have to push the bad deals on you that much. You've chosen it by going there in a first place.
Now, that does not mean that you can't get higher, valuable utility from luxury vehicle.
My dealership tried to sell me tires at $300/each. At a tire shop I got comparable tires for about 60% of that.
Dealerships make a lot of money via convenience (you’re already here for your 30k service) and just plain ignorance (most people have no idea what makes their car work or what repair cost is fair).
Dealership in Europe is not so good either. Real example: I bought a motorcycle from one of the 2 dealers in the country. I had to do the first oil change at the dealership in order not to lose the warranty (in my country, in US you can change the oil at home). They charged 100 EUR for an oil change, including 1h hour of workmanship, when it took less than 15 minutes from parking in front of the dealership to leaving the building with the work done and paperwork complete.
For a car, the oil change was 300 EUR at the dealership, same problem with losing the warranty. In that case it took one hour - no idea why because it takes just 10 minutes of actual work and there was no wait time to cool the engine and oil, they were almost cold.
One thing that keeps European dealerships a pleasurable experience is that they have to compete with direct sales. I can just go on Volkswagen's website, configure the car I want and have it delivered. That means dealerships have to provide value to stay in business. In the US you don't have direct sales (except for Tesla), so even if dealerships provide negative value they still stay in business, as long as all of them provide about the same amount of (negative) value.
Bought two cars, brand new. Never again. Dealers are abusive, scammy and inconsiderate. It’s such an arduous process that I dread the next car purchase coming up for my wife in next two years.
There was an Adam Ruins Everything episode about car dealerships in the US, from what I remember US lawmakers have made it so it's not a free market compared to the EU. I think it's similar to how US ISPs maintain monopolies in certain areas.
They don't have to compete against the factory to make sales, so they just have to compete with other middlemen selling the same commodity, which is a great situation for an anti-consumer cartel to form.
Maybe it is not very relevant today but car dealers offer a range of service unrelated to building cars, such as dealing with vehicle registration, insurance and financing.
In the case of Tesla, it is more accurate to say that they are their own dealer since they provide services like financing and registration. They even have their own insurance. Of course, these services are not free, and neither are test drives and showrooms, they are included in the price of the car.
The difference with the traditional dealership model is that they only sell Teslas, and that they don't want other dealers to sell Teslas. In a sense, they are anticompetitive.
Yes, I am playing devil's advocate here, but that's to say there is a reason for this dealership law.
> dealing with vehicle registration, insurance and financing.
Isn't this just more middlemen they set you up with, and government bureaucracy that ought to be self-evident?
From what I hear the average dealership is about the worst option, the typical sales swindle of information asymmetry and other adversarial games? I mean, it's basically right there in the name.
Yeah what I hate about dealerships is that they usually have at least four ways to screw you, and it's pretty hard for a layperson to negotiate fairly on all of them.
ie. Trade in price for old car, purchase price for new car, rate of finance, cost of extended warranties.
You can do three out of four things by your own. But is it easier if a dealership takes care of that for you? For sure. Will they take a share of everything then? For sure.
I don't understand all the complaining about dealerships in this thread, but maybe it's because I'm from the EU.
If there's anything Tesla seems to have proven, it's that dealerships are actually good (or at least better) for the customer. Tesla customers are a captive audience wholly dependent on a startup with no customer service. Non-Tesla customers have virtually infinite options, and someone to actually take care of them. I suggest you read even the most die-hard Tesla fansites and see just how bad Tesla's anti-dealership strategy is for the customer.
I own a Tesla and have had no problems with customer service.
What I do have a problem with is negotiating a price for a vehicle from a slimy dealership agent who have a litany of techniques to increase their profit for no good reason. On the Tesla website the price you pay is the price that everyone pays.
I agree their pricing model is good, but that has nothing to do with the value proposition of dealerships - just their approach to pricing. Ford could mandate flat pricing overnight to all their dealers too. It's just never been in corporate's interest, until now. For example a MacBook costs the same at BestBuy as it does at an Apple store as it does at apple.com
I'm hardly a Musk fanboy, in fact I have strong negative opinions about the, er, gentleman, but this push towards flat pricing and allowing sales directly to individuals is imo an unequivocal good. If the price everyone pays is the same online and at the dealerships then dealerships can prove their value to the customer - or not.
Ford tried with the F150 Lightning and the top end Mustangs, but the dealers all decided they like money more, so you're not getting either of those for anywhere near MSRP. Not for lack of trying by Ford though:
I mean there's ways. They could just not sell to dealers who are found to be selling over MSRP. It won't be easy, but having an online direct channel makes it a lot easier. Depends how committed you really are, I guess.
Price functions to clear the market. If the MSRP is too low, then you are going to find waiting lists. It is not like dealers like selling at a price that forces them to carry more inventory than they need to operate.
Ford could do this, but cars are expensive assets that are hard to move around and so subject to changes in local demand, macroeconomic circumstances, etc. Ford would not be able to successfully push flat pricing onto its dealers, because the dealers discover the price that clears their local market.
Why doesn't this happen in any other industry? You pay the same amount for an Apple laptop from every shop that sells it. Why doesn't BestBuy 'discover the price that clears their local market'?
Maybe I am wrong about this, but the price you pay at a dealership is the spot price for a car now and here. The price you pay on the Tesla website is for a car some time in the future, some times an indefinitely far off time in the future. I suspect the spot price for a Tesla now and here is also fluctuating, opaque, and subject to negotiation.
Sort of, at least last summer if you wanted a car here and now there was a premium attached but you could order one for msrp and indefinitely far in the future is pretty accurate as to when it would arrive.
> The price you pay on the Tesla website is for a car some time in the future, some times an indefinitely far off time in the future.
FWIW, the delivery estimates displayed on the Tesla web site for cars currently in production are pretty accurate. Also, if you order a Performance/Plaid model, you get to the front of the queue. ;-)
> I suspect the spot price for a Tesla now and here is also fluctuating, opaque, and subject to negotiation.
In that case, you're buying a used one from a dealer, so that would be true.
The annoying thing with dealers though is that when it comes to Tesla, they often have no clue what they're actually selling, or they're trying to rip off naive customers. I've seen them try to sell base Model 3's for $55K. For just a couple thousand more, you could get a brand new Model 3 Performance delivered in 2-4 weeks.
Tesla (and fixed-price car sellers like CarMax) are profiting handsomely squarely off of your inability, unwillingness or fear of negotiating. They just bake the full profit right into the up-front price and wait for people like yourself, happy to pay full price. Your loss.
I would buy bathroom fixtures from an installer, and certainly negotiate the number of labor hours, and a discount off retail price of the fixtures themselves.
People negotiate the price of a $40 ride to the airport with taxi drivers every day. I negotiated the price of a pair of prescription glasses just yesterday, and they cost less than $300.
Funnily enough, my father does (at the local equivalent). Surprisingly, it almost always works.
Even in chain stores for hardware/DIY or white goods (fridges, washing machines, etc) there is almost always leeway for haggling to some degree on higher priced items.
He works in the automotive industry, where haggling is basically mandatory - if you don't haggle, you are going to get shafted. Its the same at builders merchants and lumber suppliers.
> They just bake the full profit right into the up-front price and wait for people like yourself, happy to pay full price. Your loss.
As opposed to the haggling model where they expect to sell a car for $55K but put a $60K tag on it knowing people will haggle it down to $55K and think they got a good deal.
It's an absolutely shitty model, and it's saddening that you're falling for it.
Dealerships do not set the sticker price. Only manufacturers do. At Tesla, your only option is to pay full sticker. At dealerships, you can certainly do the same, but you can also negotiate a better deal.
Manufacturers (other than Tesla) know people aren't going to pay MSRP.
"Negotiating a better deal" is just bullshit. Honda will throw a $24K MSRP on a Honda Civic knowing people will probably actually pay $22K or whatever.
The problem here is that you think that if Tesla participated in negotiations, then you could get a $63K Model 3 Performance for $58K by negotiating. That is false. What would actually happen is that they would up the sticker price to $68K so you could feel like you got a deal when you drive away after paying $63K.
They are both anti-consumer. The regulatory solution is to break the dealers monopoly in selling cars in an area, but also force-open the repair, service and spares part markets which most car manufactures use as profit centers. I don't know the Tesla situation specifically, but some companies use extremely dodgy techniques, like voiding your entire warranty for getting oil changes outside their networks etc.
So you want regulators to require Ford, for example, to build multiple dealerships all in the same area, threatening the viability of any single dealership?
And if you were on the hook for repairing $50,000+ machines, would you allow the users of those machines to get oil changes and other services just anywhere? Or would you require a minimum level of maintenance and a known quality of parts and fluids?
Dealerships are paid by the manufacturer for new-car warranty service. My experience is they’ll go out of their way to get a warranty repair job as it pays them well and earns goodwill with the customer for a directly profitable job.
> Non-Tesla customers have virtually infinite options, and someone to actually take care of them.
This conflates dealerships with the ability/right to repair. I think dealerships are absolute scum but am completely on-board with enabling 3rd party mechanics to repair vehicles.
Dealerships don’t even ensure you don’t have the same vendor lock-in issues (getting modern ICE foreign cars repaired in small cities/towns can be a nightmare).
A scrappy startup that fields its own infrastructure (chargers) restricts access to that infrastructure by potential competators, supresses home repair and seeks to control or destroy any secondary markets/sales via DRM. Tesla's mentality is more akin to Microsoft than any startup. Startups are generally customer rather than IP-focused.
> Tesla customers are a captive audience wholly dependent on a startup with no customer service.
People keep saying this but its just not true. Look at their growth in terms of service centers.
And their mobile service fleet is the largest in the US, and reduced the need to bring the car in. And their software capability allows for less trips due to software issue.
Of course their costumer service is not perfect, but given the growth they had its essentially impossible to keep up with customer service.
If you look at other car startups, dealerships also don't fall out of the clear blue sky. Had Telsa built with dealerships they very likely would have had very similar growth problems in terms of service capacity.
> Non-Tesla customers have virtually infinite options, and someone to actually take care of them. I suggest you read even the most die-hard Tesla fansites and see just how bad Tesla's anti-dealership strategy is for the customer.
Only browsing forums where people specifically to complain is selection bias.
And you can find forums like this for lots of dealerships and car companies.
>Dealerships are a middleman much more deserving to be ruthlessly demolished by "tech disruption" than, say, journalism
Why are you inserting a moral position here? The world economy runs on middle men. I know of no-one that goes to the local ore mine to build their own car. The industry is literally built on middle men.
If you want to make the argument that there are laws protecting their middle man position that are now out dated that's one thing, but absent that they are obviously providing a service people find valuable.
There's no explanation there, just a declaration without evidence, or much thought. For example, someone still needs to deliver the keys, and the vehicle itself, of your online order. UPS might be able to deliver the keys, the car itself, probably not.
Ok, if they aren't useful, the market can decide that. If the market can't decide because of laws in place then the blame should more properly be placed on the laws.
Personally I would say car companies are manufacturers. They should concentrate on manufacturing and let the dealerships concentrate on the customer, so I don't really accept the thesis that they're useless.
That's not a middleman. A middleman buys and sells the exact same product. In this case, the steel mill buys ore from the mine, turns it into steel, and sells it to the car company. The "turns it into steel" part is what differentiates them from a middleman.
They hold inventory. That's a massive benefit to both the consumer and the manufacturer. Even if you dismiss everything else they provide (which would be unwise), that itself is enough to justify their existence.
Inventory. Good point. Brands use dealerships as captive clients of their new cars. Then they can claim that had "sell" X cars of this model yet, when in fact are pushing dealerships to buy a percentage of those cars as requisite to keep the brand image.
Dealerships are businesses, and are free to sever their relationship with the manufacturer. The fact that very few actually do, is evidence that your argument has little merit. Many dealerships seek to increase their allotment of cars to sell.
Of course they are, everybody is free to do whatever it pleases to them, but this was not my point.
In some cases is an allotment, is a borrow. In other not. The dealerships aren't borrowing cars from the maker, they are "forced" to buy those cars from the maker with their own money, and they resell the cars later to recover the money. Is called a "zero Km" car. The maker is selling the dealership X cars each year, and they are thousands of dealerships in each country, so the maker has thousands of sold cars guaranteed even before the car is the market. Official dealerships are lending money to the brands all the time.
Even after reading your second comment, I have no idea what your complaint is. Again, if it was so awful, the dealerships would abandon the manufacturer.
> Again, if it was so awful, the dealerships would abandon the manufacturer
And then the brands would be eaten or fuse in mega-brands, but this will never hap... oh, wait
> I have no idea what your complaint is.
I'm not complaining, I'm explaining. The relationship between maker and dealership is mutualistic. Both benefit of it. Dealerships exist because they are useful. The maker needs them in the correct amount to survive.
Tesla was a different car and a different case, so maybe it works for them, but is a luxury brand and they still don't sell massively. And they aren't [probably, I could be wrong] selling a lot out of the big cities.
I'm confused by all the comments here. Why is everybody so focused on the cons of dealerships instead of the cons if manufacturers own and run all the dealerships and the potential consequences, or even why it was regulated to be this way in the first place.
Would you like to highlight some? Why was it regulated this way? I can't find a great explanation, and "because it makes a lot of money for locally powerful business owners" seems to be the most common explanation floated.
I'm not familiar enough with the topic to be able to contribute meaningfully. It feels like most people here aren't, it's mostly anecdata with a tinge of libertarianism.
At most I can say I'm vaguely aware that early in US history there were a lot of issues around monopolies/oligopolies (see company towns) that lead to antitrust laws and by extension laws regarding dealerships. But I'd have to do more research to be able to say anything more concrete.
I've worked for several OEMs and have talked to dealers about this a bit. Here's a quick run-down.
No domestic OEM sprang into existence with billions of dollars in the bank to spin up a nationwide network of showrooms and repair centers. As they were growing production slowly, they had to rely on small businesses around the country to sell their products for them, which also significantly improved capital when they were growing (dealers bought from the OEM, then sold to customers, potentially thousands of miles away from factories). Over time, these businesses became franchised by the OEMs to allow them to exert some control over the customer experience, standardize parts and repair work, etc.
So that's why dealers became a thing in the first place. The tricky bit of the history is why the state laws in favor of dealers came into existence. It's very fuzzy, but in effect the Detroit "big three" became very large and powerful, with enough money to start stepping in with company-owned dealerships. The local franchised dealers, who by that time had also become quite embedded in communities and politics, thought that this was unfair since the OEMs could undercut local dealers on price, thus they lobbied their states to put in place anti-competition laws. And they were successful.
That's about it. As far as I've ever been able to tell, customer experience and monopoly prevention never really factored into it other than as dubious arguments by the dealers themselves. Now here we are ~70 years later and the market has changed significantly, but the protection laws are still there.
Fwiw, dealer margins vary by vehicle and brand, but 5-10% for mass market vehicles is common. That's money the OEMs would rather not pay out to third parties. Dealers also have massive markups on service and love warranty work because they can rake OEMs over the coals with it. The best argument I've seen in favor of dealers is that an OEM-run dealership would be incentivized to some degree to dismiss warranty work as unnecessary, while a franchised dealer tries to find every warranty hour they possibly can. That's about it, though - there's so much brand and 3rd party competition in the market these days that other arguments usually don't make much sense.
The manufacturer is necessary and the independent dealership is not. So I will always have to deal with the cons of the manufacturer. If you would like to defend independent dealerships, then tell me how exactly I would be worse off without them instead of just mentioning undefined "consequences."
I'm not defending anything. I just don't like condemning one thing without knowing the overall picture. All the comments I saw were like a bubble of identical opinions and people circlejerking about the awfulness of dealerships without any real substance. I sort of expect more from HN.
I'm not an expert about the auto industry or the auto market or the regulations and their history and I'm in no position to tell anybody here they're wrong. I just wish people would consider the wider context.
Why do these regulations exist? What benefits are there? Downsides? What changes if these regulations are changed or removed? What regulatory changes can be made to improve the state of dealerships?
Maybe allowing manufacturers to run their own dealerships would create more competition and put downward pressure on prices and improve quality of service across the industry.
How do you deal with the threat of manufacturers edging out all private dealerships so that they're the only option? Will the market eventually become worse because of a lack of competition among dealerships? How do you ensure manufacturers don't treat independent dealerships unfairly and exploit the vertical integration in an anticompetitive way? How do you prevent regulatory capture through manufacturers?
All I see here is "dealerships bad". And yes, the examples I've seen are bad and most things I've heard about dealerships really suck. But the best solution isn't necessarily to get rid of independent ones. Maybe it is, maybe it's not (imo, pretty likely not).
I'm not entirely sure how California halfway regulates gambling on tribal land when Indian affairs fall under federal jurisdiction, and tribal lands are sovereign-ish, but definitely out of state control.
Imagine if Apple wasn't allowed to sell Macbooks directly to consumers, and you had to go to an independent reseller instead. It's bizarre. How long can these laws last?
sounds good.....really good.....apple store sucks...the lines.... hahahaha...yeah no thanks. considering they only have base models now....what's the point.
The whole ecosystem for car sales in the US is rigged, and not just dealerships.
I had a surplus car, researched “fair market” value for private sale versus selling it to a dealership. I was closing up an estate, getting rid of it easily, but fairly was the goal.
It was a 2013 Subaru Impreza with 149,000 miles that I’d have to clean up for sale to a private party, I opted to unload it as a sale to a dealer. Trade in value quoted at three sites (kbb, edmunds, carfax) was $3500. Private party sale was $4100, retail sale that a buyer would pay at a dealer $5200.
Dealer puts new tires on it lists for $9999 and suddenly the three sites list “fair market” retail at $11,000, trade in at $7000 and private party at $9000.
Same VIN entered, same mileage, suddenly the car on the lot is worth more when owned by a dealership according to KBB, Edmunds and Carfax.
This is normal. You buy a car from a guy on the street, it could break on the drive home and you’re mostly shit outta luck. Even if you have a legal claim (and you usually don’t since the sale is as-is), it’s not worth the trouble and they’re likely to be judgment proof.
On the other hand, dealers usually include a warranty of some kind with their “certified pre-owned” vehicles. And as repeat players, they have a reputation to keep. The manufacturer also imposes further rules on them to protect the car brand.
Fwiw, I strongly oppose laws that protect the dealership business. But this specific thing you’ve noticed is not some grand conspiracy (how would that work anyway?). It’s just rational consumer behavior.
That doesn't quite seem responsive to your parent comment. They recognize that the dealer price is higher.
What's weird is that every price jumped after selling the car to a dealer, not that the retail price was higher than the trade-in price.
> Trade in value quoted at three sites (kbb, edmunds, carfax) was $3500. Private party sale was $4100, retail sale that a buyer would pay at a dealer $5200.
> Dealer puts new tires on it lists for $9999 and suddenly the three sites list “fair market” retail at $11,000, trade in at $7000 and private party at $9000.
That's their summary of what was changed. It's likely not the full list. The car would typically get a full detailing, inspections, cosmetic repairs, etc. as part of that process.
It's highly unlikely that's a car with 150k miles gets listed as a CPO. And, regardless, that should not affect the market price of the vehicle in general for private sale / trade in.
> You buy a car from a guy on the street, it could break on the drive home and you’re mostly shit outta luck.
Then why did the private party value double overnight?
Probably because the Kelly blue book is just sourcing local data and the dealer’s listing had an outsized effect on the average, like another commenter pointed out. KBB is not the be all, end all.
I tried that 'buy from a man on the street' thing a couple of times. Young, wasn't spending much anyway. I was fairly experienced at spotting the easy problems. Both times I bought someone else's well-hidden problem. One lasted a year, one a month. Friends, then dealers (with a warranty).
Your example is a bit of extreme but dealers can fix up a car in ways that’s not affordable to us. I’ve seen cars with paint chips and scratches come out looking brand new after a professional fixes it. Same with interior.
Again I highly doubt the dealer in your example did enough to double the price of the car. However I could see them adding a few thousand after their professionals fix and repair cosmetic issues. They usually have people on hand who can do these repairs correctly and cheaper than the retail price they would charge us to fix a single car.
They can also just send it off to a wholesale auction to get the cash out of it. Much less than what they'd list it for on the lot, but that's typically what they base their trade-in on. Especially on a car with 150k miles on it.
It sounds like those websites didn't have much data to analyze to determine the price, and the dealer had better market info, and then the websites scraped the dealer's listing and used the dealer's listing in their models which caused the website prices to change (because of the lack of previous data).
A friend of mine totalled my car while I was on vacation, not at fault, and my insurance company used these sites to lowball me. Being a used car, about 10 years old at the time, there were very few comparable vehicles for sale in my area. The insurance company wouldn't even accept one out of state. I dickered for a few weeks until I found one on Craigslist for $1k over the offering price -- I called my adjuster immediately, and he was happy to pay it out and never hear from me again.
If you actually want a fair price on a trade-in, you'll need to sell it on commission. Less parking, advertising, and expenses to get it into saleable shape -- and you don't get the money upfront while you're trying to whittle down your loan. If you want to just walk away from the car and deduct it from your purchase, you pay dearly for that convenience.
Tribes have no special privileges to circumvent federal laws unless specifically stated (e.g. Makah whaling rights nullify the Marine Mammal Protection Act) in a treaty.
The rat's nest of auto dealership laws are all at the state level, largely because the other 49 states didn't want Michigan dictating the structure of their transportation sector.
There are a lot of unchallenged aspects amongst these 500+ different semi-sovereign nations
They pretty much universally have extremely low physical infrastructure though, which limits anyone’s interest or ability to set up anything to do business. They also almost universally have extremely low administrative and legal infrastructure, with completely foreign and distinctive customs in each tribe, which really means arbitrary decisions after long negotiations. They are all too small to bother with, for most.
And finally, they almost all universally distrust the entrepreneurs that would show up, because a history of exploitation that got them in this quagmire to begin with.
But if you can imagine it, its likely possible.
There have been or currently are data centers on tribal lands, operating with some theoretical legal edge. Heard it was cumbersome and bad service though.
There are drug running corridors on unique tribes that straddle the US - Canada border with a river running between them.
There are infinite permutations.
Even with things being under Federal law, federal enforcement and federal prosecution has evidence gathering issues as well as obscurity in how to proceed, as well as having to weigh the perpetual political fallout of stirring the nest and symbiosis with the indigenous community. They don’t want some treaty challenged. They don't know how to bother or bring the case or win the case or deal with pursuing the case.
Is rent-a-tribe for payday lending actually legal? It seems like courts have said the tribe needs to have some ownership and involvement in the day to day operations for immunity to apply.
Exhibit A of something that wouldn't apply to all tribes the same because they are too different. Some are more sovereign than others in some aspects. There is nothing uniform about the concept of indigenous lands, but the arbitrage comes from everyone treating them as an amorphous group. Even the most progressive and inclusive people do this, but fortunately it just comes down to reading comprehension. If you can read or are willing to read, you'll find some unchallenged and interesting thing you might be willing to pursue. You likely will have to go to the area to find what to read though, "area" because I'm not willing to call them all "tribes".
I admire your tremendous expertise in regulatory arbitrage. I read the decision in Washington State Dept. of Licensing v. Cougar Den and now I want to become versed in some of those obscure treaties from the 1800s lol.
just keep in mind that Supreme Court case would have reached a different conclusion if it was ruled on a year later after RGB died and republicans got their appointment. but it doesn't matter because its done, at a certain level of nuance you are also playing the system and pulling strings at certain time periods to enshrine your own interests. treaties and interpretation of those treaties require an act of congress and they just aren't going to get involved a single 10,000 member tribe's issue. that's kind of a benefit of tribal issues being under the federal government, its too centralized (and bottlenecked), compared to being at municipal and state level.
A firm fixed price is a key aspect of the free market delivering maximum benefits to the consumer. If you have an Econ 101 "perfect market" in a commodity with a large number of buyers and and a large number of sellers, then you end with a single price being the marginal cost of production. Every buyer willing to pay at least the marginal cost gets to do so at the marginal cost. The difference between marginal cost and the price a buyer is the consumer surplus. The difference between actual cost and marginal cost is the producer surplus. With few exceptions the consumer surplus is massively larger than the producer surplus.
Excuse the bad summary of micro-econ 100.
Cars aren't a commodity which is why there is the potential for a consumer win in negotiation, but it's slight.
It's like gambling against the house. The best ones make it feel like you've won at the same time they suck you dry. You think you got a good price at the dealership when you negotiated the price down, but any good salesman will leave you feeling that way.
On the surface this seems like a great thing for Tesla, consumers, and those living on tribal land, but the skeptic i me wonders what is Tesla’s real benefit and/or how how are one or both of the other two getting used or screwed over?
I don’t have a problem with that and that would be preferred. What I am skeptical about is that this will turn out to not be as good a thing for tribal nations as it’s being made out to be.
Existing dealerships would be doing most of the losing. Depending on the tribes' leverage in negotiations (how remote their location is, status of their infrastructure etc) they may or may not receive what you would consider a "fair deal."
> To auto industry veterans, the company’s jaw-dropping achievement isn’t popularizing electric cars. That may have been inevitable as the consequences of climate change began to hit Americans.
I find this so fascinating. I think there comes a point where an achievement is so monumental, that people stop comprehending it as a person's achievement and instead view it as a historical event. Then the achievement becomes "inevitable", because it was the march of history pushing the achievement forward.
Being the CEO of a successful car company is an achievement. But revolutionizing the car industry itself is "inevitable".
I’m not sure what planet the author is living on. 70 years of oligopoly would suggest otherwise. Seat belts, safety glass and steering columns that don’t harpoon the driver may have been inevitable as the consequences of dying in minor crashes began to hurt Americans, but it sure took a lot of dedicated people like Ralph Nader to make it so.
I think the argument is which perspective you take. From the internal observe perspective, you actually have to do the thing for the thing to get done. Yes you need individuals.
If you take an external observer perspective that collectively internal and external pressures cause individuals with talent and drive to go and tackle that problem.
For example, even if you personally did absolutely nothing, Apple will still collectively create some new fangled device with new features, new performance etc etc. That’s literally true of every human endeavor - no person is doing it alone regardless of how pivotal they may seem. So then the question is “how pivotal is Musk personally”. Certainly Tesla existed outside of him but I think his accomplishment there was to make EV cars sexy and grow that industry from nothing despite headwinds. Would it have happened without him? Not sure. I’m not as bullish as the author given how Tesla really was a motivating force for them to get the show on the road and government regulations in the space are a joke (vs what is actually needed) and even still manufacturers are dragging their feet.
So I think the author is right that “it would have happened anyway” but wrong about the scale of the specific impact Musk has had through Tesla.
In fact, though, given that for their first 15 years or so Tesla was willing to lose $10k+ per car, it seems likely to me that they actually delayed other car manufacturers from making more electric cars as those reasonable companies were unwilling to compete with someone willing to throw away that much money.
Certainly the opportunity existed. Certain pre-conditions like battery tech and environmental concern were met.
That doesn't detract from Musk's achievement. Toyota could have been making EVs since the early 2000's. Volvo, Nissan, and Ford all had EVs available before Teslas became widely available. If EVs were such a trivial eventuality, these companies would have been dominant players in that space.
But Tesla went on to become the world's most valuable car company. Musk single handedly changed the public perception of EVs, and he kickstarted the entire industry. The major auto makers would not take EVs as seriously if not for him.
I am not a Musk shill. I think he is unhinged. You can go through my comment history as proof of my dislike of Teslas if you care to.
Starting a company and growing it to be one of the top 10 largest companies in the world is a massive achievement. Popularizing EVs is a massive achievement. Your opinions on Musk do not change that.
Why are you making this about 'simping for Musk'? It doesn't matter if someone was predicting it. Most people making most predictions are wrong. Also, things don't happen because someone predicted it.
What made EV-as-an-industry financially feasible is the advancement in lithium battery technology, which by itself is fueled by the growth of the smart device industry. It's the parts that were changed, not the design of EV. Any details in today's EV design is optimization made for the sake of competition, and have nothing to do with the modern form-factor, if there's any. (It's still the same motor-connected-to-battery from (probably) early 1900s.)
The actual achievement should look like how Apple nailed the modern smartphone form-factor. Hardware-wise, LG did it first with their Prada phone, but Apple polished it with matching software and UX. Even though each component was already explored by others, Apple still had to come up with a working combination. That's an achievement.
Anyways, back to Tesla. Tesla didn't really achieve anything about EV. The real achievement of Tesla is car-as-smart-platform (which engulfs the entirety of self-driving). AFAIK, this is difficult on ICE cars due to mechanical and business reasons, but Telsa could avoid them by building on EV. Now this is a real new thing. IIRC, this is also what Elon has always been emphasizing. It's more than just an EV company.
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[ 4.8 ms ] story [ 233 ms ] threadThat might just work out well.
There's a small uncontacted tribe living on an island in the Indian ocean that legally is a part of India. However, the govt does not attempt to enforce the law and in fact actively prevents people from reaching the island.
Although, there are entities that are de facto sovereign and even have had the wherewithal to keep it with arms. Myanmar is home to more than one of these, actually. There's the Shan State (https://en.wikipedia.org/wiki/Shan_State), and within their de facto sovereign areas there are pockets of smaller administrative units that are armed and are also de facto sovereign, accepting nominal de jure Burmese authority over the authority of the nationalist minority independence movements, such as the Wa State with (https://en.wikipedia.org/wiki/United_Wa_State_Army). Alas, the tribes here in the US don't quite have that kind of firepower, nor the desire to refight the latter half of the 19th Century.
That's not to say that the relationships between tribes, the federal government, and state governments is any less complicated and at times contentious. The Supreme Court tends to favor tribal sovereignty as almost akin to that of a state, but not in all circumstances and where "full faith and credit" ends when it comes to tribal judicial authority when it comes to civil matters seldom actually represent actual "full" anything. Although tribes do have sovereign immunity so without congressional approval one can't simply litigate out every issue by suing the tribe, so the ambiguities are likely to persist.
My understanding is that now, in the US, due to a court decision being overturned, abortion is now seen as a state issue.
This means that if Tesla dealerships are an option, so are abortion clinics, to bypass state law.
I don't think drugs are, at least not completely, but car dealerships are seen as under the authority of the state.
All it takes, is eroding the rights of tribal land, beneath that of the state, instead of equal to/immune to, and Telsa's plan won't fly.
If I was GM, or Ford, or what not, I'd backdoor fund an abortion clinic on tribal land, then use that poliical pressure to pass laws, which would stand for years, at least, until being struck down.
Once tribal land no longer has the power to flout state law, bam, no more Tesla problem for Ford or GM.
Americans in the room: stop getting all emotional, and flagging things which meet your "us vs them" political blather, and start examining the implications instead.
Even if the above "sneaky corporate play" is not the outcome here, this move by Tesla made me realise, a reservation is the a place where abortion clinics may fight the next battleground.
It took nearly two hours of people telling me I was an idiot for not taking the extended leather steering wheel warranty etc before getting out of there.
Both of these experiences were at official Hyundai dealerships.
To be fair, this was my experience buying a Subaru in Wyoming. The paperwork was then signed, I pushed back on one or two fee line items, they were removed with apologies and I was offered a beer.
I did later get screwed by the dealership when I was tired of doing my own maintenance after having replaced the timing belt on my truck and let the wife take it in for service and they literally replaced every fluid in the vehicle including brake fluid on a 2 year old vehicle, a $900 service.
Of course that comes at the cost of customer experience.
In Europe discounts are much lower, and prices are a lot more set in stone.
However, the key caveat here is that most people don't know what they're doing.
So in the US 80% of the population is robbed so that the 20% can take advantage.
In Europe everyone gets a worse deal, but it's never going to be super bad.
Pick your poison :-)
"What's the best price you can give me?"
"Sir, we advertise our lowest prices up front so you don't have any pressure to haggle."
"You can do better than that price."
"... Let me see what I can do."
I believe he got a grand knocked off when it was all said and done.
The other dealers focus a little more on the experience and will haggle a bit with you. They usually don’t use high pressure tactics but won’t give you the lowest price.
I also find the personalities of used car salesmen to be so grating that I'd rather do it all over email.
Haggling is defiantly a thing in the UK you wouldn't buy a car for sticker price.
https://m.lingscars.com/
https://www.lingscars.com/
Ordering a BMW was an even more pleasant experience and haggling for 6% off was easier than when I did it with my Jeeps.
> I just shut the finance guy down immediately
> Ordering a BMW
These facts paint a pretty obvious picture of why car buying is a much more pleasant experience for you than most: you have experience, you have options, you don't have a lot of patience, and you are willing to loudly signal those things "immediately," leaving no metaphorical door open for a metaphorical foot to slide into.
If someone else is reading this it's worth taking into account when you deal with a higher ticket item than you usually would: in those situations, being polite is a huge disadvantage and a good salesperson will take a mile for every micrometer you give them.
What you have to do is agree to financing (with no prepayment penalties) in exchange for a discount, and then, before you get the first bill you pay the car off in full.
Insurance would have been more than the monthly car payment, and when I expressed that $400/mo wasn't awful, but $1,000/mo for a car was a non-starter, the guy was seriously like "Well, do you want to eat food, or have a car (with lighted cup holders) to get to work?" and "If you can't afford rent, you can sleep in the car!"
That's still one of the dumbest conversations I've ever had.
So basically: it's a culture thing. High pressure tactics are entrenched on the sales culture side, and the customer culture has gotten used to tolerating them.
As an aside, IIRC, someone once told me that Japanese makeup is superior to and cheaper than Western makeup, because Japanese customers are picky and won't put up with less.
The concept of dealerships makes some sense to me: an individual retail customer has zero leverage with a mass market manufacturer, but they'll have more leverage with a smaller dealer, and the dealer will have more leverage with the manufacturer because they're buying far more than a single person. Though the actual implementation leaves a lot to be desired.
Tesla organizes test drives too. And you can bring your Tesla in for maintenance (well not in these states obviously). So, it's not like you don't get any service.
It's the protectionism that is bad. Without it, more manufacturers would cut out the middle man and sell directly. Because why give that big of a cut to a middle man you don't need?
The service they offer is convenience and possibly peace of mind(over an owner sale), but they sure do take an arm and a leg for it.
Just call a dealers finance department and find out if they sell standalone warranty and get a quote (you may need to provide a sample VIN). Make sure they are quoting the official manufacturer warranty coverage (new car) vs some BS third party warranty.
If you do this in advance you can fight off the finance guy easily and (more often) get them to price match to keep your business. This method has saved me thousands.
knowing that warranty can be purchased separately for brand itself is a great way to beat up the finance guy, as that may be where they expect to make the bulk of their profit (although nowadays it may be “market adjustment” and other BS fees)
If I want to place an order for a vehicle (not buy one off their lot), the dealer does nothing but still makes a cut.
Not to mention, the majority of folks selling cars (even new cars) are some of the slimiest you'll meet. They are masters of manipulation.
This short NPR piece provides more information: https://www.npr.org/2022/11/09/1135633742/economists-hate-ca...
P.s. example of manipulation: some years back I bought a used Honda Civic. The 4th person I got passed to made sure to tell me "the civic is the most stolen car in the US", while trying to sell me on some aftermarket alarm system. I of course knew this was an intentionally misleading statistic, but I'm sure many folks could fall for it.
> If I want to place an order for a vehicle (not buy one off their lot), the dealer does nothing but still makes a cut.
I'm pretty sure this is the same in Europe, or at least in France. Even if I wanted to buy a local make, say a Renault, I don't know how I'd go about getting in touch with the manufacturer directly instead of going through a dealership.
Now I've never actually bought a new car, only motorcycles. And even though it's the same process (I don't think I can order a Honda nor a BMW "direct"), the dealerships didn't try to make me buy useless options.
The difference is that manufacturer-owner dealership is basically not an option in US.
My local Toyota dealership is owned by Toyota. Some other ones are just "licensed" to be their official dealerships, so not owned by Toyota.
In US the "licensed" one can decide "well, the car is rare" (and in pandemic that was every car), here is extra 10-20% dealer markup just because we can. In EU, customer would just go to official Toyota one that doesn't do shit like that
Volkswagen even offers you the option to fetch your vehicle from their factory in Wolfsburg (tour included, drinks cost extra) instead of having it delivered.
Strong wording for something that is not true. You can bypass them by getting a Tesla.
To me this is a bogus argument because with Tesla you don't have the other option. Well, you kind have it but Tesla showrooms/service centers are usually a shitty experience in terms of "a salesman caring for you". Anyway, I'm from Europe and I guess that the car dealership experience is pretty different (I know the US ones just by movies and Monkey Island)
Also, my experience at Tesla dealerships has been the best of any dealership (and keep in mind I'm not a musk apologist (quite the opposite), nor own or plan to own a Tesla). They literally give you the keys and let you drive around by yourself, no questions asked. The experience is lower stress than buying a pair of shoes.
Incumbent car manufacturers had no particular incentive to upset the applecart, but Tesla had the opportunity to see how insane it was.
Interestingly, BYD has chosen a direct to consumer model here in Australia (if you haven’t heard of them, you soon will). Mercedes has now switched to an agency pricing model where the dealers sell on commission and don’t own the cars, so Mercedes can legally control the retail price.
There is some serious pretzel-thinking going on here somewhere in the halls of power (pretzled, one assumes, by careful application of money). The idea that there needs to be a middle-man is weird. The people who want one less layer of abstraction don't need to justify themselves, the dealers have to be doing a lot more than being not-so-bad to justify a mandatory role in the process.
> "The big achievement, instead, was making direct-to-consumer car sales possible."
This isn't the biggest problem America faces, but the idea of a business needing to "innovate" to sell its product to consumers has to be the most unAmerican sentences I've read in an article. It is hard to get a more petty strike in against capitalism.
What capitalism ? The dealer problem is precisely because in the past dealerships negotiated for a laws that stops free market from happening
Here (in EU) we have anything from manufacturer-led dealership to entirely independent one.
But there laws that make it basically forbidden for manufacturers to sell directly and have a lot of protection for dealerships business. Hence no competition. That was made into slapping extra price over MSRP on rarer cars there. That practice started spanning pretty much all cars during pandemic.
Here is one example
https://www.carscoops.com/2022/11/honda-dealerships-payment-...
> They just provide a service - they have cars available to test drive
... sometimes
> and have a real person to talk to during the purchase
That is almost always clueless about nitty gritty, and just wants to sell you the one they earn most money on.
Many brands learned, the hard way, that clients watch on internet but don't buy a new car by internet. Is a too expensive investment. Most people refuse to talk with a robocall and want a local dealership where they can return if they have troubles.
Brands are always trying to reduce the number of official dealerships, to discover later that their business has run dry, and are about to be eaten by a bigger brand. Is happening all the time.
Car dealers have discovered they can make huge profits by exploiting the inventory shortage. They’ve also kept some of the most arrogant sales staff (“closers”) who are guaranteed big pay days for every sale.
While this isn’t always the case, the days of paying below MSRP appears to be a thing of the past
Calling the sales department and asking for market adjustment and dealer adds info for make/model is also recommended. Most sales people, although not all, will disclose rough numbers.
We went to Honda instead, and paid MSRP. They were only 3 months out, but nobody above us in line wanted the color of the next one that came in so we got it in a month.
A lot of people want to be able to buy a car the way they buy almost any other consumer product: easily, for a set price they can research ahead of time. Dealerships stand in the way of that.
If Tesla truly wants to remain a luxury brand forever, its market cap should reflect that.
It shouldn't be the market cap of the next Toyota (car maker) and Panasonic (battery maker) combined and multiplied by 10.
The Model 3 was launched in July 2017, about 5.5 years ago. Unveiling in April 2016, more than 6.5 years ago. During the unveiling, if I'm not wrong, they announced the $35k Model 3. In 2019 they actually released the $35k Model 3, as more of a publicity stunt, since they pulled it after only 2 months.
Back then €1 was about $1.2, so that price would have been about €24k.
Instead, in the real world of today, where €1 is less than $1, the cheapest Model 3 you can buy in Europe is about €54k.
So at the new exchange rate, it's more than twice as expensive, and even with the old exchange rate, it would have still been $45k (about 30% more expensive).
So the "Model 2" will actually be around the price that was promised for Model 3.
More than that, Tesla is notoriously unreliable regarding forecasts. At this point I don't think the Model 3 will ever be back to $35k/€35k.
And this new "Model 2" will probably be launched 10 years from now and it will cost what the Model 3 was supposed to cost, back in 2017.
I don't know about you, but I don't make my plans around stuff that takes 15 years to be ready (5.5 years until now + the likely 10 more years it takes them to launch it).
That was being said about literally every Musk venture, either failed or successful.
>The Model 3 was launched in July 2017, about 5.5 years ago. Unveiling in April 2016, more than 6.5 years ago. During the unveiling, if I'm not wrong, they announced the $35k Model 3. In 2019 they actually released the $35k Model 3, as more of a publicity stunt, since they pulled it after only 2 months.
>Back then €1 was about $1.2, so that price would have been about €24k.
>Instead, in the real world of today, where €1 is less than $1, the cheapest Model 3 you can buy in Europe is about €54k.
>So at the new exchange rate, it's more than twice as expensive, and even with the old exchange rate, it would have still been $45k (about 30% more expensive).
Blame ECB (for currency value drop) and supply and demand. Turns out enough people want to buy 35k€ vehicle for 54k€.
>And this new "Model 2" will probably be launched 10 years from now and it will cost what the Model 3 was supposed to cost, back in 2017.
Yeah, but who cares? The purchasing power of that will be equal to what it would have cost based on original estimates.
We call that "vaporware", not worth discussing.
Now, when it fell about 50%. I was just behind the news.
At a certain point this graph was true: https://wolfstreet.com/wp-content/uploads/2021/10/US-Tesla-m...
Which was just insane.
Why do people care about market cap? Because it shows mindshare. It shows what people care about and where investments should go, preorders, a lot of that stuff.
Plus market cap can be converted into money (not 1:1, but still).
Now, that does not mean that you can't get higher, valuable utility from luxury vehicle.
Dealerships make a lot of money via convenience (you’re already here for your 30k service) and just plain ignorance (most people have no idea what makes their car work or what repair cost is fair).
For a car, the oil change was 300 EUR at the dealership, same problem with losing the warranty. In that case it took one hour - no idea why because it takes just 10 minutes of actual work and there was no wait time to cool the engine and oil, they were almost cold.
In the case of Tesla, it is more accurate to say that they are their own dealer since they provide services like financing and registration. They even have their own insurance. Of course, these services are not free, and neither are test drives and showrooms, they are included in the price of the car.
The difference with the traditional dealership model is that they only sell Teslas, and that they don't want other dealers to sell Teslas. In a sense, they are anticompetitive.
Yes, I am playing devil's advocate here, but that's to say there is a reason for this dealership law.
Isn't this just more middlemen they set you up with, and government bureaucracy that ought to be self-evident?
From what I hear the average dealership is about the worst option, the typical sales swindle of information asymmetry and other adversarial games? I mean, it's basically right there in the name.
Granted, most of my knowledge is second hand..
ie. Trade in price for old car, purchase price for new car, rate of finance, cost of extended warranties.
I don't understand all the complaining about dealerships in this thread, but maybe it's because I'm from the EU.
I own a Tesla and have had no problems with customer service.
What I do have a problem with is negotiating a price for a vehicle from a slimy dealership agent who have a litany of techniques to increase their profit for no good reason. On the Tesla website the price you pay is the price that everyone pays.
I'm hardly a Musk fanboy, in fact I have strong negative opinions about the, er, gentleman, but this push towards flat pricing and allowing sales directly to individuals is imo an unequivocal good. If the price everyone pays is the same online and at the dealerships then dealerships can prove their value to the customer - or not.
https://www.hotcars.com/ford-cracking-down-greedy-dealers-ma...
Apple sets a floor price through razor thin margins but how do they set a ceiling?
Am I wrong?
On the other hand, dealerships also sold future cars - and sometimes still do - when you want to have something customized.
So, there's no difference besides difference in demand.
FWIW, the delivery estimates displayed on the Tesla web site for cars currently in production are pretty accurate. Also, if you order a Performance/Plaid model, you get to the front of the queue. ;-)
> I suspect the spot price for a Tesla now and here is also fluctuating, opaque, and subject to negotiation.
In that case, you're buying a used one from a dealer, so that would be true.
The annoying thing with dealers though is that when it comes to Tesla, they often have no clue what they're actually selling, or they're trying to rip off naive customers. I've seen them try to sell base Model 3's for $55K. For just a couple thousand more, you could get a brand new Model 3 Performance delivered in 2-4 weeks.
Good for you, really. That doesn't invalidate the countless horror stories that prop up on those forums multiple times a day.
https://electrek.co/2022/06/15/tesla-tops-list-most-satisfie...
People negotiate the price of a $40 ride to the airport with taxi drivers every day. I negotiated the price of a pair of prescription glasses just yesterday, and they cost less than $300.
So... yes?
Even in chain stores for hardware/DIY or white goods (fridges, washing machines, etc) there is almost always leeway for haggling to some degree on higher priced items.
He works in the automotive industry, where haggling is basically mandatory - if you don't haggle, you are going to get shafted. Its the same at builders merchants and lumber suppliers.
As opposed to the haggling model where they expect to sell a car for $55K but put a $60K tag on it knowing people will haggle it down to $55K and think they got a good deal.
It's an absolutely shitty model, and it's saddening that you're falling for it.
Dealerships do not set the sticker price. Only manufacturers do. At Tesla, your only option is to pay full sticker. At dealerships, you can certainly do the same, but you can also negotiate a better deal.
Manufacturers (other than Tesla) know people aren't going to pay MSRP.
"Negotiating a better deal" is just bullshit. Honda will throw a $24K MSRP on a Honda Civic knowing people will probably actually pay $22K or whatever.
The problem here is that you think that if Tesla participated in negotiations, then you could get a $63K Model 3 Performance for $58K by negotiating. That is false. What would actually happen is that they would up the sticker price to $68K so you could feel like you got a deal when you drive away after paying $63K.
And if you were on the hook for repairing $50,000+ machines, would you allow the users of those machines to get oil changes and other services just anywhere? Or would you require a minimum level of maintenance and a known quality of parts and fluids?
Dealerships are paid by the manufacturer for new-car warranty service. My experience is they’ll go out of their way to get a warranty repair job as it pays them well and earns goodwill with the customer for a directly profitable job.
This conflates dealerships with the ability/right to repair. I think dealerships are absolute scum but am completely on-board with enabling 3rd party mechanics to repair vehicles.
Dealerships don’t even ensure you don’t have the same vendor lock-in issues (getting modern ICE foreign cars repaired in small cities/towns can be a nightmare).
Lol. Startup. That crutch is long gone. If you are worth more than Ford and Honda combined, there are no excuses.
I.e. they're big but they're operating like a (s)crappy startup.
Every serious VC is like Microsoft.
What you're talking about are not startups, in my opinion, they're mom and pop stores, the ones that don't grow explosively.
https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...
People keep saying this but its just not true. Look at their growth in terms of service centers.
And their mobile service fleet is the largest in the US, and reduced the need to bring the car in. And their software capability allows for less trips due to software issue.
Of course their costumer service is not perfect, but given the growth they had its essentially impossible to keep up with customer service.
If you look at other car startups, dealerships also don't fall out of the clear blue sky. Had Telsa built with dealerships they very likely would have had very similar growth problems in terms of service capacity.
> Non-Tesla customers have virtually infinite options, and someone to actually take care of them. I suggest you read even the most die-hard Tesla fansites and see just how bad Tesla's anti-dealership strategy is for the customer.
Only browsing forums where people specifically to complain is selection bias.
And you can find forums like this for lots of dealerships and car companies.
Why are you inserting a moral position here? The world economy runs on middle men. I know of no-one that goes to the local ore mine to build their own car. The industry is literally built on middle men.
If you want to make the argument that there are laws protecting their middle man position that are now out dated that's one thing, but absent that they are obviously providing a service people find valuable.
> They had to work through dealerships as middlemen [...] largely as a way of spreading risk. [...] Those conditions are, arguably, gone today.
Personally I would say car companies are manufacturers. They should concentrate on manufacturing and let the dealerships concentrate on the customer, so I don't really accept the thesis that they're useless.
A dealer buys an unregistered car. Registers, checks, sorts finance, offers after sales support. That is their value add.
their 'value-add' is mandatory and driven by regulation.
it's akin to talking about the TurboTax 'value-add' while failing to mention their anti-consumer efforts.
https://www.youtube.com/watch?v=meHYBhcpdvQ
And on that subject.
What may be the best channel on youtube, amazingly well researched, written, shot, presented... and it's a(incredulous tone) motorcycle channel?!
In some cases is an allotment, is a borrow. In other not. The dealerships aren't borrowing cars from the maker, they are "forced" to buy those cars from the maker with their own money, and they resell the cars later to recover the money. Is called a "zero Km" car. The maker is selling the dealership X cars each year, and they are thousands of dealerships in each country, so the maker has thousands of sold cars guaranteed even before the car is the market. Official dealerships are lending money to the brands all the time.
Even after reading your second comment, I have no idea what your complaint is. Again, if it was so awful, the dealerships would abandon the manufacturer.
And then the brands would be eaten or fuse in mega-brands, but this will never hap... oh, wait
> I have no idea what your complaint is.
I'm not complaining, I'm explaining. The relationship between maker and dealership is mutualistic. Both benefit of it. Dealerships exist because they are useful. The maker needs them in the correct amount to survive.
Tesla was a different car and a different case, so maybe it works for them, but is a luxury brand and they still don't sell massively. And they aren't [probably, I could be wrong] selling a lot out of the big cities.
At most I can say I'm vaguely aware that early in US history there were a lot of issues around monopolies/oligopolies (see company towns) that lead to antitrust laws and by extension laws regarding dealerships. But I'd have to do more research to be able to say anything more concrete.
No domestic OEM sprang into existence with billions of dollars in the bank to spin up a nationwide network of showrooms and repair centers. As they were growing production slowly, they had to rely on small businesses around the country to sell their products for them, which also significantly improved capital when they were growing (dealers bought from the OEM, then sold to customers, potentially thousands of miles away from factories). Over time, these businesses became franchised by the OEMs to allow them to exert some control over the customer experience, standardize parts and repair work, etc.
So that's why dealers became a thing in the first place. The tricky bit of the history is why the state laws in favor of dealers came into existence. It's very fuzzy, but in effect the Detroit "big three" became very large and powerful, with enough money to start stepping in with company-owned dealerships. The local franchised dealers, who by that time had also become quite embedded in communities and politics, thought that this was unfair since the OEMs could undercut local dealers on price, thus they lobbied their states to put in place anti-competition laws. And they were successful.
That's about it. As far as I've ever been able to tell, customer experience and monopoly prevention never really factored into it other than as dubious arguments by the dealers themselves. Now here we are ~70 years later and the market has changed significantly, but the protection laws are still there.
Fwiw, dealer margins vary by vehicle and brand, but 5-10% for mass market vehicles is common. That's money the OEMs would rather not pay out to third parties. Dealers also have massive markups on service and love warranty work because they can rake OEMs over the coals with it. The best argument I've seen in favor of dealers is that an OEM-run dealership would be incentivized to some degree to dismiss warranty work as unnecessary, while a franchised dealer tries to find every warranty hour they possibly can. That's about it, though - there's so much brand and 3rd party competition in the market these days that other arguments usually don't make much sense.
I'm not an expert about the auto industry or the auto market or the regulations and their history and I'm in no position to tell anybody here they're wrong. I just wish people would consider the wider context.
Why do these regulations exist? What benefits are there? Downsides? What changes if these regulations are changed or removed? What regulatory changes can be made to improve the state of dealerships?
Maybe allowing manufacturers to run their own dealerships would create more competition and put downward pressure on prices and improve quality of service across the industry.
How do you deal with the threat of manufacturers edging out all private dealerships so that they're the only option? Will the market eventually become worse because of a lack of competition among dealerships? How do you ensure manufacturers don't treat independent dealerships unfairly and exploit the vertical integration in an anticompetitive way? How do you prevent regulatory capture through manufacturers?
All I see here is "dealerships bad". And yes, the examples I've seen are bad and most things I've heard about dealerships really suck. But the best solution isn't necessarily to get rid of independent ones. Maybe it is, maybe it's not (imo, pretty likely not).
That's what we have anti-trust for.
> But with 574 federally recognized tribal governments in 35 states, Tesla’s new strategy could do a lot to close that advantage.
Fuck ye!
That's what he meant.
I had a surplus car, researched “fair market” value for private sale versus selling it to a dealership. I was closing up an estate, getting rid of it easily, but fairly was the goal.
It was a 2013 Subaru Impreza with 149,000 miles that I’d have to clean up for sale to a private party, I opted to unload it as a sale to a dealer. Trade in value quoted at three sites (kbb, edmunds, carfax) was $3500. Private party sale was $4100, retail sale that a buyer would pay at a dealer $5200.
Dealer puts new tires on it lists for $9999 and suddenly the three sites list “fair market” retail at $11,000, trade in at $7000 and private party at $9000.
Same VIN entered, same mileage, suddenly the car on the lot is worth more when owned by a dealership according to KBB, Edmunds and Carfax.
On the other hand, dealers usually include a warranty of some kind with their “certified pre-owned” vehicles. And as repeat players, they have a reputation to keep. The manufacturer also imposes further rules on them to protect the car brand.
Fwiw, I strongly oppose laws that protect the dealership business. But this specific thing you’ve noticed is not some grand conspiracy (how would that work anyway?). It’s just rational consumer behavior.
What's weird is that every price jumped after selling the car to a dealer, not that the retail price was higher than the trade-in price.
> Trade in value quoted at three sites (kbb, edmunds, carfax) was $3500. Private party sale was $4100, retail sale that a buyer would pay at a dealer $5200.
> Dealer puts new tires on it lists for $9999 and suddenly the three sites list “fair market” retail at $11,000, trade in at $7000 and private party at $9000.
How much did the tires cost?
It's based on comps. Dealer in your zip listed it at a comical price and it dragged the price up because data was sparse.
> You buy a car from a guy on the street, it could break on the drive home and you’re mostly shit outta luck.
Then why did the private party value double overnight?
Again I highly doubt the dealer in your example did enough to double the price of the car. However I could see them adding a few thousand after their professionals fix and repair cosmetic issues. They usually have people on hand who can do these repairs correctly and cheaper than the retail price they would charge us to fix a single car.
If you actually want a fair price on a trade-in, you'll need to sell it on commission. Less parking, advertising, and expenses to get it into saleable shape -- and you don't get the money upfront while you're trying to whittle down your loan. If you want to just walk away from the car and deduct it from your purchase, you pay dearly for that convenience.
Tribes have no special privileges to circumvent federal laws unless specifically stated (e.g. Makah whaling rights nullify the Marine Mammal Protection Act) in a treaty.
The rat's nest of auto dealership laws are all at the state level, largely because the other 49 states didn't want Michigan dictating the structure of their transportation sector.
They pretty much universally have extremely low physical infrastructure though, which limits anyone’s interest or ability to set up anything to do business. They also almost universally have extremely low administrative and legal infrastructure, with completely foreign and distinctive customs in each tribe, which really means arbitrary decisions after long negotiations. They are all too small to bother with, for most.
And finally, they almost all universally distrust the entrepreneurs that would show up, because a history of exploitation that got them in this quagmire to begin with.
But if you can imagine it, its likely possible.
There have been or currently are data centers on tribal lands, operating with some theoretical legal edge. Heard it was cumbersome and bad service though.
There are drug running corridors on unique tribes that straddle the US - Canada border with a river running between them.
There are infinite permutations.
Even with things being under Federal law, federal enforcement and federal prosecution has evidence gathering issues as well as obscurity in how to proceed, as well as having to weigh the perpetual political fallout of stirring the nest and symbiosis with the indigenous community. They don’t want some treaty challenged. They don't know how to bother or bring the case or win the case or deal with pursuing the case.
Exhibit A of something that wouldn't apply to all tribes the same because they are too different. Some are more sovereign than others in some aspects. There is nothing uniform about the concept of indigenous lands, but the arbitrage comes from everyone treating them as an amorphous group. Even the most progressive and inclusive people do this, but fortunately it just comes down to reading comprehension. If you can read or are willing to read, you'll find some unchallenged and interesting thing you might be willing to pursue. You likely will have to go to the area to find what to read though, "area" because I'm not willing to call them all "tribes".
Excuse the bad summary of micro-econ 100.
Cars aren't a commodity which is why there is the potential for a consumer win in negotiation, but it's slight.
It's like gambling against the house. The best ones make it feel like you've won at the same time they suck you dry. You think you got a good price at the dealership when you negotiated the price down, but any good salesman will leave you feeling that way.
You forgot a few words there. I assume it's supposed to say:
>The difference between marginal cost and the price a buyer is [willing to pay] is the consumer surplus.
Eg when the buyer is willing to pay $30 for a box, but the box costs $25 then that's a $5 consumer surplus.
Did I understand it right or did you mean something else?
I find this so fascinating. I think there comes a point where an achievement is so monumental, that people stop comprehending it as a person's achievement and instead view it as a historical event. Then the achievement becomes "inevitable", because it was the march of history pushing the achievement forward.
Being the CEO of a successful car company is an achievement. But revolutionizing the car industry itself is "inevitable".
If you take an external observer perspective that collectively internal and external pressures cause individuals with talent and drive to go and tackle that problem.
For example, even if you personally did absolutely nothing, Apple will still collectively create some new fangled device with new features, new performance etc etc. That’s literally true of every human endeavor - no person is doing it alone regardless of how pivotal they may seem. So then the question is “how pivotal is Musk personally”. Certainly Tesla existed outside of him but I think his accomplishment there was to make EV cars sexy and grow that industry from nothing despite headwinds. Would it have happened without him? Not sure. I’m not as bullish as the author given how Tesla really was a motivating force for them to get the show on the road and government regulations in the space are a joke (vs what is actually needed) and even still manufacturers are dragging their feet.
So I think the author is right that “it would have happened anyway” but wrong about the scale of the specific impact Musk has had through Tesla.
Tesla built a $600B market cap as of today and spends $0/per car advertising.
Seems like that was $10k/car well invested.
That doesn't detract from Musk's achievement. Toyota could have been making EVs since the early 2000's. Volvo, Nissan, and Ford all had EVs available before Teslas became widely available. If EVs were such a trivial eventuality, these companies would have been dominant players in that space.
But Tesla went on to become the world's most valuable car company. Musk single handedly changed the public perception of EVs, and he kickstarted the entire industry. The major auto makers would not take EVs as seriously if not for him.
I am not a Musk shill. I think he is unhinged. You can go through my comment history as proof of my dislike of Teslas if you care to.
Starting a company and growing it to be one of the top 10 largest companies in the world is a massive achievement. Popularizing EVs is a massive achievement. Your opinions on Musk do not change that.
Musk didn’t start it. He’s was involved from very early, though
https://www.forbes.com/2011/03/17/why-predictions-bad-leader...
https://newmr.org/blog/most-predictions-are-wrong-so-lets-ke...
https://fs.blog/future-babble-why-expert-predictions-fail-an...
The actual achievement should look like how Apple nailed the modern smartphone form-factor. Hardware-wise, LG did it first with their Prada phone, but Apple polished it with matching software and UX. Even though each component was already explored by others, Apple still had to come up with a working combination. That's an achievement.
Anyways, back to Tesla. Tesla didn't really achieve anything about EV. The real achievement of Tesla is car-as-smart-platform (which engulfs the entirety of self-driving). AFAIK, this is difficult on ICE cars due to mechanical and business reasons, but Telsa could avoid them by building on EV. Now this is a real new thing. IIRC, this is also what Elon has always been emphasizing. It's more than just an EV company.
https://web.archive.org/web/20221115123055/https://www.kbb.c...