Kill the laws that keep car dealers in business • Hacker News Board

Re: Kill the laws that keep car dealers in business

#61

Post by joosters » Wed, Oct 28, 2015, 11:13 AM UTC

"Don’t ever take a fence down until you know the reason why it was put up"

You can't write a balanced article on car dealerships without researching why these laws were enacted in the first place. So many people here just assume "oh, it's because of greed" - but perhaps you should spend a short time first of all investigating why these laws were created and the problems they were trying to solve.

Likewise, you can't write a convincing article about removing these laws if you don't speak of the reasons why the laws were created. You need to show why these reasons are no longer good.

Re: Kill the laws that keep car dealers in business

#62

Post by coldtea » Wed, Oct 28, 2015, 11:14 AM UTC

TeMPOraL wrote: post #23

baddox wrote: post #20

Earlier quoted context omitted.

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.

"It works with Tesla because people trust Tesla because they are in it for making the perfect car"?

I don't think that reasoning explains the situation. Their cars aren't even that good, especially earlier production models and their several problems:

https://en.wikipedia.org/wiki/Tesla_Motors#Product_issues

Re: Kill the laws that keep car dealers in business

#63

Post by notjoedimaggio » Wed, Oct 28, 2015, 11:18 AM UTC

nomercy400 wrote: post #30

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 pric…

I agree in theory, but the reality is that these companies made large investments under one set of legislation.

If a society flips and completely changes the economic/legislative landscape under which companies operate, it creates a very unstable business environment and discourages capex especially.

This would not be good for the long term economic health.

Re: Kill the laws that keep car dealers in business

#64

Post by manaskarekar » Wed, Oct 28, 2015, 11:18 AM UTC

joosters wrote: post #61

"Don’t ever take a fence down until you know the reason why it was put up" You can't write a balanced article on car dealerships without researching why these laws were enacted in the first place. So many people here just assume "oh, it's because of greed" - but perhaps you should spend a short time first of all investigating why these laws were created and the problems they were trying to solve. Likewise, you can't…

Nice quote, led me to https://www.chesterton.org/taking-a-fence-down/.

> The quotation you’re looking for is from Chesterton’s 1929 book, The Thing, in the chapter entitled, “The Drift from Domesticity”:

In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.

Re: Kill the laws that keep car dealers in business

#65

Post by venning » Wed, Oct 28, 2015, 11:20 AM UTC

joosters wrote: post #61

"Don’t ever take a fence down until you know the reason why it was put up" You can't write a balanced article on car dealerships without researching why these laws were enacted in the first place. So many people here just assume "oh, it's because of greed" - but perhaps you should spend a short time first of all investigating why these laws were created and the problems they were trying to solve. Likewise, you can't…

The following [1] is an article that explains a bit of the supposed corruption behind the franchise protection laws. It is from a very biased source (Mother Jones), but the underlying facts can be sourced from many places.

Essentially, California pioneered the idea of protecting existing franchises from being cannibalized by the manufacturer that they were dependent on. But other states have taken the idea to an extreme.

[1] http://motherjones.com/politics/2009/02/why-you-cant-buy-new...

Re: Kill the laws that keep car dealers in business

#66

Post by [deleted] » Wed, Oct 28, 2015, 11:20 AM UTC

alkonaut wrote: post #56

venning wrote: post #37

I paused my software development career to sell cars for a year. I sold cars at two different Honda dealerships, both owned by Fortune 500 companies in, what I believe is, the densest single market for Hondas in the US (Metro DC). There's a couple things missing from the situation as described by the author. First, dealerships don't really make that much of a profit on new car sales. At least not Honda dealers. Used…

> In order to sell a car, you have to have a car on your lot. I don't understand the above: you mean people buy new (unused) cars from dealers, "off the shelf"? Aren't most new cars custom? Are US customers more impatient, so that in order to close a sale you need to have the various options pre-built, so that people don't have to wait four months for their new car to be built? I have rarely seen a new car sitting at…

[deleted]

Re: Kill the laws that keep car dealers in business

#67

Post by tim333 » Wed, Oct 28, 2015, 11:21 AM UTC

dagw wrote: post #44

eru wrote: post #42

Earlier quoted context omitted.

> It can't just be refactored by waving a regulatory wand at it and hoping for the best. No need for anything new, just find the sanest country, and copy their laws.

Laws are a product of culture. Copying a countries laws, without also copying its culture won't give you the effects you are hoping for.

Copying sane laws may not be perfect but it's not a bad way to go.

Re: Kill the laws that keep car dealers in business

#68

Post by jasode » Wed, Oct 28, 2015, 11:21 AM UTC

venning wrote: post #37

I paused my software development career to sell cars for a year. I sold cars at two different Honda dealerships, both owned by Fortune 500 companies in, what I believe is, the densest single market for Hondas in the US (Metro DC). There's a couple things missing from the situation as described by the author. First, dealerships don't really make that much of a profit on new car sales. At least not Honda dealers. Used…

>A dealership inventory is controlled in such a way that area dealerships are forced to compete heavily with each other. In order to sell a car, you have to have a car on your lot. In order to have a car on your lot, you have to order it from Honda.

Maybe Toyota does it differently from Honda but this is the way the Toyota dealership manager explained it to me: all the dealerships are grouped into a "region" such as Houston+Dallas+Austin+etc. The new cars going to those 3 cities enter the USA at the gulf port of Houston (or Galveston? can't remember exactly). If I go to a Houston dealership "A" and I want a black Camry but they don't have any on the lot, the dealer can check the entire region's inventory. If Houston dealership "B" or Austin dealership "C" has them, those other dealerships are required to swap cars with dealer "A". That way, the customer isn't forced to go to another dealer just to get a particular car. The dealers' computer screens showing inventory all show every competitors' available inventory. It's possible the Toyota manager's explanation was bs or I left out some critical details.

To make the Toyota story compatible with your Honda story, I suppose that for a dealer to sell a car, he still needs to have inventory. To sell 50 cars, he needs to be allocated 50 by Toyota Inc. But he's doesn't have to sell particular the 50 he happened to get. The "50" is really part of a shared pool of cars.

Re: Kill the laws that keep car dealers in business

#69

Post by eloisant » Wed, Oct 28, 2015, 11:22 AM UTC

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…

In France there is almost no "inventory" of new cars in car dealership. You try the model they have, but then you can configure it exactly how you want and it gets custom built for you before being shipped to the dealership.

Why can't you do that in US?

Re: Kill the laws that keep car dealers in business

#70

Post by tim333 » Wed, Oct 28, 2015, 11:30 AM UTC

alaskamiller wrote: post #45

This is why Apple will take over the car industry. Integrate the best supply chain management, best logistics, best customization processes, best personalization processes, best servicing processes, best retail sales force, best legal compliance/adherence processes. Then look at how to make a giant iPod on wheels then deploy.

That's an interesting point. I was wondering how Apple could get anywhere with no car experience but I guess if they had fairly generic cars manufactured by some outsourced company but with a better electronics/software and a better sales and service experience that could work.