Kill the laws that keep car dealers in business
1–10 of 325 posts
Re: Kill the laws that keep car dealers in business
#2Maybe the dealerships and in general physical shops should evolve into paid-for showrooms?
That is, you pay, say, $50, and you get to try a bunch of cars or in general products that they have on loan from various manufacturers and get some guidance from the staff if needed.
Then once you figure out what you want, you buy it online and get it shipped to you.
Then there is no need to "protect" those shops, since the customer is paying precisely for the only value they add, which is the ability to try out things and ask for advice, and in fact the value of the advice would increase since there would be no conflict of interest.
Re: Kill the laws that keep car dealers in business
#3"the price of the cars that are sold needs to be high enough to cover the costs of building and storing the unsold ones."
We shouldn't be having this problem anymore. It's a massive detriment to the economies of scale model. Most people don't need to buy a car overnight, which ironically is because they are so expensive.
Keeping a small amount of cars for test driving and personal inspection is all that is needed. Then all that needs to be done is to batch up requests for production and shipping. Charge more 2 day shipping. Maybe Amazon can get into selling cars and same day deliveries for free with Amazon Prime.
Re: Kill the laws that keep car dealers in business
#4Maybe the dealerships and in general physical shops should evolve into paid-for showrooms? That is, you pay, say, $50, and you get to try a bunch of cars or in general products that they have on loan from various manufacturers and get some guidance from the staff if needed. Then once you figure out what you want, you buy it online and get it shipped to you. Then there is no need to "protect" those shops, since the cu…
If you're selling me something very big and expensive I better get a chance to look at it up close and try it out. If you're going to charge me for that experience then I will go somewhere else.
What should happen is the car manufacturers buy out the best dealerships and simply sell the cars direct. It'll allow them to optimize their distribution and inventory channels and give them a bigger margin overall. It's going to put many dealerships out of business but it's an old business model that no longer works in the world; you can't expect to keep it afloat when there is no good business reason for doing so.
Re: Kill the laws that keep car dealers in business
#5Maybe the dealerships and in general physical shops should evolve into paid-for showrooms? That is, you pay, say, $50, and you get to try a bunch of cars or in general products that they have on loan from various manufacturers and get some guidance from the staff if needed. Then once you figure out what you want, you buy it online and get it shipped to you. Then there is no need to "protect" those shops, since the cu…
If you're selling me something very big and expensive I better get a chance to look at it up close and try it out. If you're going to charge me for that experience then I will go somewhere else. What should happen is the car manufacturers buy out the best dealerships and simply sell the cars direct. It'll allow them to optimize their distribution and inventory channels and give them a bigger margin overall. It's goin…
The car manufacturers actually lobbied for laws that prevent them from cutting out dealerships, to remove barriers to entrepreneurs investing in building brand-exclusive dealerships. The dealerships wouldn't have been built without these laws protecting them, that's why the manufacturers lobbied for them.
The legal system in place was a precondition for the development existing American car dealership network, and I doubt that the dealerships are going to go down without a breach of contract fight.
Re: Kill the laws that keep car dealers in business
#6Maybe the dealerships and in general physical shops should evolve into paid-for showrooms? That is, you pay, say, $50, and you get to try a bunch of cars or in general products that they have on loan from various manufacturers and get some guidance from the staff if needed. Then once you figure out what you want, you buy it online and get it shipped to you. Then there is no need to "protect" those shops, since the cu…
If you're selling me something very big and expensive I better get a chance to look at it up close and try it out. If you're going to charge me for that experience then I will go somewhere else. What should happen is the car manufacturers buy out the best dealerships and simply sell the cars direct. It'll allow them to optimize their distribution and inventory channels and give them a bigger margin overall. It's goin…
Except that the largest margin for dealerships and car manufacturers is the Aftersales parts/accessories. There is a good reason they exist, it's just that companies like Tesla are offering a different business model of packaged accessories (some other car manufacturers do similar but usually on top of individual accessories not instead of).
Re: Kill the laws that keep car dealers in business
#7Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebody has to run the showroom, if you want to actually like see the car before you buy it. So we're going to do a regulatory taking of the franchise, worth millions of dollars per dealership, and then have the manufacturer open a showroom and warehousing lot and service center in every town and city that has a dealership? Or just open a direct sales channel to compete with dealers, but make the existing dealers perform service and deliver inventory? And take your trade-in?
Manufacturers hate dealers. It's mutual. The only reason consumers don't hate the manufacturers so much is that they have never had to deal with them directly. Dealer protection laws are there because manufacturers have a long history of trying to steal from dealers, cheat them, and put them out of business at whim. Those are the manufacturers that consumers are asking to deal with directly. I'm sure they'll treat consumers better than they treat their business partners!
Re: Kill the laws that keep car dealers in business
#8I love this article.
I've only spent a year working in the automotive industry between detail/lot attending, not even any sales. I've noticed some real big problems with the way dealers do business. It needs a serious overhaul. I've been working very part time on some of my ideas to reshape the industry. It definitely needs some shaking up.
Re: Kill the laws that keep car dealers in business
#9Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…
> Dealer protection laws are there because manufacturers have a long history of trying to steal from dealers, cheat them, and put them out of business at whim.
That doesn't justify them. I thought the US is supposed to be anti-regulatory? Why didn't dealers handle this by becoming primarily multiple-manufacturer and thus able to switch to or favor a different manufacturer at whim?
Re: Kill the laws that keep car dealers in business
#10A long time ago I saw an ad on the back of a magazine, paying tribute to Dell's direct model. It was a Johnnie Walker ad, with a bar napkin. On the napkin was written Dell's business plan; it had "make computer, sell computer" basically crossed out, replaced with "sell computer, make computer."
Make the car -> sell the car
Sell the car -> make the car
This switch should have happened a long time ago. The near total elimination of the vast inventory system. It would make most automakers dramatically more profitable.
Dealerships should be replaced by small automaker-owned sales venues, stocked with one of each model for test driving purposes. Customers order their car, with some limited customizations. They come back in a week and pick up their car, and save 20% off current prices. The automaker never builds a car that hasn't already been sold.