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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

#161

Post by braythwayt »

Rumford wrote: post #152
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…

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

“The State has no right to _____.”

These arguments are rife in US political discourse, but as an outsider with no emotional investment in the idea of guarding against the dreaded tyranny of kings... I note that such arguments always avoid addressing the underlying problem.

In your case, there is a fence in your kitchen, and there you are tearing it down without pausing even for a moment to ask why it is there. Was there a fire while you were out, and the floor on the other side of the fence is no longer sound? Is there some kind of toxic chemical spill going on? Is this a crime scene that must be preserved while evidence is gathered?

The argument of whether the state has a right is certainly interesting, and we ought to have it, but we still ought to understand why they thought the fence should be put there, regardless of our interpretation of whether they had that right or not.

Re: Kill the laws that keep car dealers in business

#162

Post by BinaryIdiot »

1stop wrote: post #6
BinaryIdiot wrote: post #4

Earlier quoted context omitted.

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).

> Except that the largest margin for dealerships and car manufacturers is the Aftersales parts/accessories

Isn't that always the case? Regardless, cutting out the dealership gives the car companies more margin for this stuff and possibly lower prices for consumers (possibly though probably doubtful).

Re: Kill the laws that keep car dealers in business

#163

Post by braythwayt »

lawstudent2 wrote: post #157
ssharp wrote: post #87

Earlier quoted context omitted.

That's the exact idea -- you don't know, so don't assume and do your research.

Yeah, but this is bullshit. We do know. The laws are garbage and should go the way of the dodo.

I’d be very careful about using the argument “Go the way of the Dodo.” Contemporary thought is that it was a bad thing that humans hunted the Dodo to death.

I’d use the analogy “Go the way of the dinosaurs,” it speaks to the fact that those who adapted, the avians, survived, without the baggage of debating the morality of hunting a species to death.

Re: Kill the laws that keep car dealers in business

#164

Post by fluxquanta »

TheCondor wrote: post #127
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…

The article misses the issue. New cars are very nearly sold direct, the dealer doesn't arbitrarily mark up prices, in fact I think some manufacturers prevent it. There is a fixed profit for the dealer, for the most part. The manufacturers go to fairly good lengths to get the cars people want to the dealers too and then they try to have an assortment of dealer customizations that can be done, like the dealer can chang…

I work in the used car industry and it hurts my soul. You're absolutely right that it needs disruption, specifically the "buy here-pay here" (BHPH) model.

BHPH sales are when people with no/terrible credit get an overpriced used car financed by the dealership where it was purchased at 29% interest and $300 bi-weekly payments (for example). The dealers bank on the fact that these people will probably default in a couple of months. Then, the dealer repossesses the vehicle (easily with starter interrupt and GPS devices), and then it can be resold at the exact same price (and the dealer can sue for deficiency balances owed by the previous owner if they so choose). The people who have to resort to this way of car buying are already desperate, and the BHPH dealers are designed to profit off of them.

The FTC and Consumer Financial Protection Bureau are slowly starting to catch on, but the lobbying by groups like the National Independent Auto Dealers Association is very strong -- they have A LOT of money, and they're always looking for ways around the law. The latest trend is changing a few words on the contract, calling it a "lease" and ripping off the consumers in just the same way.

Re: Kill the laws that keep car dealers in business

#165

Post by JoeAltmaier »

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…

But... Uber! AirBnB! These companies all win by opposing, not just one law, but a baroque edifice of law constructed clumsily over a century. With a little push, it all comes down.

So, now Tesla wants to try selling new cars a new way. By allowing actual information (over the internet) to be freely available about every facet of their car. You like it, you try it in a nearby demo center, you buy it! Like so many other things we buy (like houses)

I'm pretty sure new cars don't need any protected status as a sales issue. In fact, most of us are pretty sure we're not getting responsibly informed by the car salesman in person. Just the opposite.

Lets say it out loud - car dealers think (know) they can make more sales by manipulating us in person. They fear a world where folks make independent decisions. So they make up any excuse to put off that future.

Re: Kill the laws that keep car dealers in business

#166

Post by jessaustin »

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…

Don't ever take a fence down...

Conservatism is fine as mental shortcuts go, but we shouldn't take every mental shortcut available. We don't actually have to worry about shit that supposedly happened a hundred years ago, if we take the time to look at what's going on now. Right now, there are customers who want to buy, and producers who want to sell. Relaxing dealer requirements would allow those beneficial transactions to occur.

If we're so concerned that unspecified bad shit will happen because who knows it might happen, then simply put a time limit on the relaxed requirements. That is, the law could say that dealer requirements will come back in force in five years, unless subsequent legislation extends the period. In five years, legislators and lobbyists and maybe even the public can conclude "yes the world is exactly the same now as it was in 1920 so we need exactly the same laws", or not.

Re: Kill the laws that keep car dealers in business

#167

Post by maratd »

venning wrote: post #138
grandalf wrote: post #137

Earlier quoted context omitted.

Car dealers are among the biggest "small business owner" donors to political campaigns in the US. The National Auto Dealers Association is a big part of most dealers' lives, and they know who is buttering their bread. I mention this b/c I don't think it's a gradual accident... The dealers forced Ford to shut down factory stores in Oklahoma not too long ago. This is a turf battle.

Absolutely. Regulatory capture is a real thing and a really bad thing. I'm certainly not defending the franchise protections. I would just like to be clear: people get hurt when we uproot the status quo quickly. That isn't to say we shouldn't do it. There aren't easy answers here, particularly for the legislators who have to make those decisions.

> There aren't easy answers here

I don't think the circumstances are as grim. Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show. They may need to apply for a job at the new factory store, but that's really the extent of the displacement. You're not eliminating an entire industry. You're re-organizing it to reduce friction.

Re: Kill the laws that keep car dealers in business

#168

Post by JoeAltmaier »

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

The very premise of MJ is biased. They search for/create articles to support their agenda. They are in no way similar to Consumer Reports or any other independent lab, because they start with the assumption that their goals are right. Not scientific, not by a million miles, and I think 'very biased' is exactly the right name for them.

Re: Kill the laws that keep car dealers in business

#169

Post by Rumford »

braythwayt wrote: post #161
Rumford wrote: post #152

Earlier quoted context omitted.

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

“The State has no right to _____.” These arguments are rife in US political discourse, but as an outsider with no emotional investment in the idea of guarding against the dreaded tyranny of kings... I note that such arguments always avoid addressing the underlying problem. In your case, there is a fence in your kitchen, and there you are tearing it down without pausing even for a moment to ask why it is there. Was th…

Point taken, and I'm glad you see the merit in the discussion about what things the state has any right to do. After all, sometimes trespassing is the right thing to do. I certainly hope the fire department doesn't wait to be invited if they notice my house is burning down!

I guess I'm just extremely certain that after studying the lineage of a ban like this, one would discover that no, it really isn't necessary. Maybe I'll go test that hypothesis later.

Re: Kill the laws that keep car dealers in business

#170

Post by venning »

maratd wrote: post #167
venning wrote: post #138

Earlier quoted context omitted.

Absolutely. Regulatory capture is a real thing and a really bad thing. I'm certainly not defending the franchise protections. I would just like to be clear: people get hurt when we uproot the status quo quickly. That isn't to say we shouldn't do it. There aren't easy answers here, particularly for the legislators who have to make those decisions.

> There aren't easy answers here I don't think the circumstances are as grim. Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show. They may need to apply for a job at the new factory store, but that's really the extent of the displacement. You're not eliminating an entire industry. You're re-organizing it to reduce friction.

Agreed. And I didn't mean to sound grim.

Markets tend to be efficient in the long-term and inefficient in the short-term as it is still determining how to place capital and whatnot based on new information. I feel like our industry (software, and technology generally) understands that well, even if implicitly. It's just that those "inefficiencies" are often real people and the "short-term" means being unemployed or unemployable for a while.

It's important to innovate and to do so boldly, but to also not be cavalier with how that innovation affects a world that was spinning long before that innovation was conceived of. Not to say that you or anyone else on this thread is doing so, I just wish to point it out.

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