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Kill the laws that keep car dealers in business

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Re: Kill the laws that keep car dealers in business

#141

Post by gshubert17 »

jonlucc wrote: post #110
coldtea wrote: post #57

Earlier quoted context omitted.

A lot of things people say they would pay for, when speaking to the press or market research etc, in practice they never do -- and obviously not in large numbers. I've read several stories of founders for example hearing people say "I'd buy that" etc, but in practice they found out nobody would bother with their product/service, it solved a non-painful enough problem, etc. Paying for checking out cars to buy seems li…

I see an even bigger problem. Most people hate car salespeople. I hate car shopping and mattresses are even worse because the salespeople's incentives are very unclear and they clearly dick around with people. That perception isn't going to change overnight (and the salespeople's tactics would be tough to change quickly), so I won't pay for it any time soon.

The last new car I bought was a Saturn in 1992, mainly because their business model involved no haggling on prices and salespeople were there to help customers find the best match for them. I don't understand why this model didn't spread further.

Re: Kill the laws that keep car dealers in business

#142

Post by venning »

grandalf wrote: post #134
venning wrote: post #90

Earlier quoted context omitted.

From everything I've read about the industry for the last 15 years, this is all completely correct and serves to demonstrate why it's such a hard industry. Extremely high costs, low profit margins, fiendish competition, considerable regulation, and absolutely no guarantee that the new product you just invested billions in won't flop after you've done all the work.

True, but there are some low hanging fruit that have not been attempted yet... in the following areas: Finance: - why can't I rent a car for a month and if I like it sign up for a year or two or three? If I want to own it, why can't I just convert to a purchase? These options are not fluid and interchangeable which necessitates much more of a "sale" rather than a more flexible, value oriented approach. A manufacturer…

> why can't I rent a car for a month and if I like it sign up for a year or two or three?

You can, but if you don't buy it they now have a radically-devalued product they still need to sell. Some dealers experiment with this. Many of my customers had problems with buying a car with 100 miles on it "new". I can't remember the exact regulation, but at a certain mileage a car is no longer legally new.

> trim levels are out of control and make inventory planning much worse.

Absolutely. Honda attempts to address this (in the US market) by having very few trim levels and (when I was selling) no options.

> Buying a car takes hours while you wait for the salesperson to try to sucker you...

Yes. It's a terrible practice. One that is getting slightly better with internet shoppers who get the price negotiated before they step into the dealership. Most of my old-school managers felt that, within a few decades, negotiating over prices would end.

Re: Kill the laws that keep car dealers in business

#143

Post by Tloewald »

The situation with car dealerships is a quagmire. I'd suggest a broader, simpler, and probably more politically viable solution would be a law requiring truth in advertised prices:

If you advertise something as $X then that is the maximum total amount you pay (tax-inclusive, all fees, etc.) Almost every other developed country does this (except for hotel stays and some large ticket items, like houses and -- ironically -- cars, but we can do better, right?)

Now, I can imagine a sudden wave of protest -- but wait, what about state-wide or nation-wide advertising campaigns -- this happy meal for only $2.99? Sales tax varies from county to county, and then there are crazy exemptions, tax holidays, etc.

EXACTLY. If you believe in markets then you should, at minimum, believe in price transparency. (Free markets assume perfect information -- how perfect can your information be if you can't even figure out the true price?) If this puts pressure on states and counties to simplify their tax rates (under pressure from businesses) then GOOD.

If the prices that get advertised have to be real prices you get a huge improvement in market behavior -- from real estate to healthcare to cars to food -- immediately. And it will effectively demolish most of the issues with car dealers since they'll need to quote actual prices.

Re: Kill the laws that keep car dealers in business

#144

Post by rch »

Asbostos wrote: post #116
rch wrote: post #93

Earlier quoted context omitted.

I seem to recall that the laws were put in place, at least in part, to protect the dealers who were financing the manufactures, only to have the manufactures come in and sell directly once vehicles were ready.

I'd have thought a contract between the dealer and manufacturer would have solved that. Why don't other industries need laws to protect retailers from manufacturers?

Look at the three-party alcohol distribution laws in Texas, for example. Many of these laws are being revisited now, but business was much different 50+ years ago.

Re: Kill the laws that keep car dealers in business

#145

Post by harmegido »

aianus wrote: post #86
Spooky23 wrote: post #80

Earlier quoted context omitted.

That's very logical. But the en vogue approach today is to disrupt everyone out of business because technology entrepreneurs and capitalists are "good guys". The argument for this stuff is mostly "OMG Tesla is awesome!". But folks forget/ignore that having to deal with A fortune 50 company as a consumer isn't fun either (recall: AT&T in the old days). Your local car dealer may have annoying commercials, but the folks…

Then buy a Tesla instead of a GM shitbox. What's your point?

I'm pretty sure the point is that if everyone buys a Tesla, they become the big company.

Re: Kill the laws that keep car dealers in business

#146

Post by chiph »

venning wrote: post #83
jasode wrote: post #68

Earlier quoted context omitted.

>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…

Yes and no. Yes, we could see the inventory of every Honda dealer in the region. And yes, we could exchange cars. However, the "requirement" that cars be swapped was something that managers told customers to ease their minds while they steered them towards a car that was on our lot. The only requirement was that both dealers had to agree on which cars were being swapped. Why tell them that? Because managers are loath…

> Customers hate having "mileage" on a new car

I don't know why the swaps are driven. Why doesn't the dealer get a 1-ton truck and trailer, and haul the car to keep the odometer low? Oh, and the story about "Our swaps are gently driven by retirees" is bogus. I've been passed by those guys going 90 mph.

Re: Kill the laws that keep car dealers in business

#147

Post by [deleted] »

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…

[deleted]

Re: Kill the laws that keep car dealers in business

#148

Post by Amezarak »

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.

> 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.

Both times I bought a new car, it was because my previous car had been totaled.

This would hugely complicate my day-to-day logistics. Is there no way to get a normal car quickly, the same day?

Re: Kill the laws that keep car dealers in business

#149

Post by venning »

fulafel wrote: post #133
venning wrote: post #65

Earlier quoted context omitted.

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 extr…

What makes you say MJ is very biased? I've been finding their articles pretty good and can't spot any links (or allegations thereof) to interest groups in https://en.wikipedia.org/wiki/Mother_Jones_%28magazine%29

I should not have said "very" biased. I also did not mean it as an indictment, only to prep the reader that there may be a bit of a slant.

Google can point out some allegedly biased reporting they have done [1], but I'm certainly no expert on it. My concern, in this particular case, is that Mother Jones has, by most accounts, a left-leaning bias [2, among others]. Dealership associations have, by most accounts, a right-leaning bias [3, among others]. The conflict there raises my internal alarm when reading them on this issue.

Moreover, you can't talk about franchise protections without talking about two major recent presidents during their tenure as governors. That those presidents are generally referred to negatively by MJ (in my personal estimation) and that casting their political legacies in a negative light makes a naturally-appealing target, needs to be considered.

That said, I agree with you. I find MJ's articles generally good and I believe their reporting on this issue was very enlightening.

[1] https://www.google.com/search?q=mother+jones+bias

[2] http://www.allsides.com/news-source/mother-jones

[3] http://fivethirtyeight.com/features/news-flash-car-dealers-a...

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