Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Kill the laws that keep car dealers in business

vox.com

Post reply on HN
Print view View original

21–30 of 325 posts

Re: Kill the laws that keep car dealers in business

#21

Post by adventured »

btgeekboy wrote: post #12
adventured wrote: post #10

A 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 e…

That elimination of the inventory system works great for cars produced locally. What of those produced overseas, or even on the opposite side of the US? Consumers can handle waiting a week for a car they ordered, but you can't just throw a car into the UPS cargo hold and deliver it to the buyer's doorstep a day or two later.

Just as an example, if you're Toyota, and you know how well your top five models sell in the US, you'd either build two factories strategically located near the west and east coasts, or you'd build one giant plant in eg Texas and ship the cars west or east, splitting the time it would take to ship it across the entire country side to side.

Most of Toyota's profit comes from just a few best selling models (that tend to be their best selling models year after year). That's where you'd start on this type of automation, and you'd invent new manufacturing technology accordingly as necessary.

The criticism I see most often on the concept, is that it'd be challenging because our manufacturing processes are pathetically ancient. I agree: it's time to move manufacturing into the future. It's not a question of if it can be done, it's: who is going to do it first.

Re: Kill the laws that keep car dealers in business

#22

Post by runholm »

suneilp wrote: post #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. Th…

Based on the fact that a large industry is not doing this I would guess there are some reason it's not a good idea economically. I don't see an obvious flaw in your suggestion, but it's so simple that someone in the industry have to have come up with it already and decided not to do it.

Re: Kill the laws that keep car dealers in business

#23

Post by TeMPOraL »

baddox wrote: post #20
TeMPOraL wrote: post #13

Earlier quoted context omitted.

Yeah. People think that because it works with Tesla, it will work with everyone, but they miss the point that Tesla is a pretty unique company - both because they're new to the market, and because under Elon's leadership, they have making the best possible car and electrification of world transport as a terminal goal , not as instrumental to simply getting more money. Other companies won't play nicely like this, beca…

What does being new to the market or having a supposedly noble goal have anything to do with selling cars directly to customers?

The reason there are laws protecting dealerships is that manufacturers were screwing everyone over as much as they could. Tesla can be trusted to deal with customers directly without screwing them over, because of the reasons I mentioned. Other companies don't have them, and can not be trusted. Therefore you can't assume that just because it works with Tesla, it will work with the rest of the industry.

Re: Kill the laws that keep car dealers in business

#24

Post by jasonkester »

This seems like an opportunity for an Uber/AirBnB move.

Find a jurisdiction anywhere in the USA where direct manufacturer sales are legal. Negotiate with the manufacturers to handle direct-to-consumer sales for them. Write your "app" so that customers can build their car online and have the order go straight to the factory. Charge the customer a "delivery fee" to get their heavily discounted car to them, from which you make your profits.

Seems like a lot of work, and a lot of fighting with a lot of bureaucracy, but that's what all these "disrupt the industry" startups like to spend their billions doing. I'm surprised that nobody is doing it today.

Re: Kill the laws that keep car dealers in business

#25

Post by chrisan »

jpfr wrote: post #18
suneilp wrote: post #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. Th…

In Europe, only used cars are sold directly off the parking lot or showroom of the dealer. Normally, you choose the options (color, engine options, leather seats, ..) and the car is built for you. You can pick it up some weeks/months later. Manufacturers of high-priced cars may invite you to pick up the car at the plant when it comes off the line. They have a special "experience" designed around that.

> They have a special "experience" designed around that.

This can happen in the US too: http://www.chevrolet.com/bowling-green-assembly-plant.html

Re: Kill the laws that keep car dealers in business

#26

Post by Shivetya »

How do you plan to buy out all the existing investment these dealerships have? You certainly cannot legislate away their property without compensation. What about the jobs? That is no small number. With those go all the local taxes, benefits, and such as well.

Dealer direct, sounds good. Until you find out that car you really want has a demonstration center that is too far away, in a place you don't want to go. Until you find out repairs are done at an authorized shop that handles so many brands they cannot get it right. Until you have serious problems with your car and that manufacturer is so far away they can ignore you for a good amount of time... and so on.

While not everyone has a good experience at a dealer I have never had a bad one and considering the number of vehicles I have gone through, well. Dealers aren't there just to sell cars. They they maintain them, they work to keep you happy so you come back. This means they act as go between consumer and manufacturer and can often push the manufacturer to fix things they might just overlook.

Tesla is fine as it is now simply because they don't sell enough cars to matter, let alone to the majority of people their cars are not affordable and the customers who do buy have the time to go anywhere they need to to buy a car or even have someone go get it. When, and it is a very big when, Tesla has any real volume let us watch how they handle problems

Re: Kill the laws that keep car dealers in business

#27

Post by adventured »

gedrap wrote: post #17
adventured wrote: post #10

A 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 e…

>>> The automaker never builds a car that hasn't already been sold. I am not familiar with the industry, how long does it take to make a car and deliver it to the customer (let's assume to a major US city)?

It takes Toyota 16 to 18 hours or so from start to finish on a car, with around 35 total man hours of labor put into each.

I think a custom vehicle ordered from a sales outlet, could be completed within 2 to 3 days, and shipped out, available to the customer within 7 to 10 days.

It would require pushing manufacturing forward in numerous ways, and retooling the entire process of making a car for this business model, but there's no reason that can't be done. It would already exist if the laws allowed for direct sales.

Re: Kill the laws that keep car dealers in business

#28

Post by thawkins »

Shivetya wrote: post #26

How do you plan to buy out all the existing investment these dealerships have? You certainly cannot legislate away their property without compensation. What about the jobs? That is no small number. With those go all the local taxes, benefits, and such as well. Dealer direct, sounds good. Until you find out that car you really want has a demonstration center that is too far away, in a place you don't want to go. Until…

Just remove the protectionist support they have and then let the market have its way.

Re: Kill the laws that keep car dealers in business

#29

Post by andmarios »

TeMPOraL wrote: post #13
bgribble wrote: post #7

Yep, 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…

Yeah. People think that because it works with Tesla, it will work with everyone, but they miss the point that Tesla is a pretty unique company - both because they're new to the market, and because under Elon's leadership, they have making the best possible car and electrification of world transport as a terminal goal , not as instrumental to simply getting more money. Other companies won't play nicely like this, beca…

It already works for everyone except for people living in the US.

Re: Kill the laws that keep car dealers in business

#30

Post by nomercy400 »

Shivetya wrote: post #26

How do you plan to buy out all the existing investment these dealerships have? You certainly cannot legislate away their property without compensation. What about the jobs? That is no small number. With those go all the local taxes, benefits, and such as well. Dealer direct, sounds good. Until you find out that car you really want has a demonstration center that is too far away, in a place you don't want to go. Until…

Shouldn't you have a free market economy? Where a customer is able to choose between a dealer or a direct sale company?

The customer is the one that should be able to choose between a cheaper price with a lower service, or a higher price with more service. The problem here is that companies want to provide the cheap alternative but aren't allowed to do so.

If a dealer cannot compete with a direct sale company on price and service, doesn't that make their business model flawed/outdated.

Post reply on HN