Kill the laws that keep car dealers in business

I'm a big believer in Chesterton's Fence too, but what do you do about fences put up by someone who had no right to put it there? If someone erected a wall through the middle of your kitchen, would you have the same reticence to tear it down? The way I see it, the state has no right to enforce a ban like this, and we would be justified in ignoring and circumventing it.

This is kind of a bullshit response, honestly. This is a very, very well plumbed, documented and reported on issue. The corollary to your statement about fences is:

"About which you do not know, be silent."

Car dealership laws may have served a purpose, but their primary purpose these days is to enrich car dealership owners:

http://www.npr.org/sections/money/2013/02/19/172402376/why-b...

http://www.americanbar.org/publications/franchise_lawyer/201...

Their passing will be a net gain for the consumer.

It's interesting because often the trade-in value is mostly what is being negotiated, but the customer doesn't realize this. Or perhaps financing rate games are being played which the customer is unaware of.

I think many of the limitations come down to the way the car business is financed. Ford Motor Credit, for example, uses lease rates as an incentive to get more vehicles manufactured. So while the market rate for a customer might be 3.5%, there is 1% financing available for a limited time.

Similarly, Ford Motor Credit may prefer to incentivize leases vs purchases (or vice versa) because both look different on the company's books. There is arbitrage going on because the financing rate on a lease is partially due to the credit risk of the customer, and partially due to the residual price risk of the make/model/trim.

So the company may be happy to offer 0% financing on a sold vehicle, but only 2.9% on a lease, because the company keeps the residual price exposure.

This makes lease/purchase financings difficult to transform, because the accounting is only done relative to "new" vs "end of lease", so doing it on a vehicle someone rented for a month which has 2560 miles on is much more challenging, and the result of this is that the market value of the 1 day old "used" vehicle is often significantly below invoice, since when it is sold as used none of the new car incentives apply, lowering the value of the vehicle significantly, and disproportionately to miles driven, wear and tear, etc.

So I think it's ultimately that there is insufficient sophistication on the finance/accounting side to allow OEMs or dealers to have any incentive to keep 1 month old vehicles with 2560 miles on their books. With a small adjustment to price and warranty, the customer should be completely indifferent to this vehicle vs a new one.

I think this is a legacy of the car business as an assembly line where everything coming out of the "finished" end needs to be sold ASAP before it goes stale. Consumers likely want a much more services oriented approach b/c cars are typically more of a long term asset.

I think these are legacies of the core reason why the car companies went with the franchising model in the first place: It takes tons of capital to bring cars to market and sell/distribute them nationally, and there is a fair bit of risk too.