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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

#201

Post by ghaff »

petriw wrote: post #36
bgribble wrote: post #15

Earlier quoted context omitted.

This works great if you don't mind cutting down the number of car models a whole lot. Factories are reconfigured multiple times a year to make different models and there's weeks of downtime between manufacturing runs. It might be months before there's a factory that is ready to make a lower-volume model.

In Sweden where I live popular configurations fitting specific price brackets are kept in stock. Custom configurations on the other hand can take weeks or months to get from the factory to Sweden. Those who know what they want pre-order a car so that it's delivered when they want to replace their current car, which is usually every 3 years. I bet Dell still keeps an inventory, it's just a vastly reduced one.

>I bet Dell still keeps an inventory, it's just a vastly reduced one.

That's pretty common. I can walk into an Apple store and walk out with one of a variety of models. However, many memory and disk configs will have to be special-ordered and I'll have to wait a couple of weeks.

I expect if car selling moved to more of a BTO system, you'd see dealers/factory stores stocking some level of popular model/trim package/color combinations but everything else would be weeks to months to get.

Re: Kill the laws that keep car dealers in business

#202

Post by prostoalex »

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.

> manufacturers were screwing everyone over as much as they could

Not to doubt car dealers' reputation for honesty and integrity, but what's a good resource to read up on offenses the manufacturers have committed?

Re: Kill the laws that keep car dealers in business

#203

Post by OopsCriticality »

jasode wrote: post #68
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…

Toyota is also a little funny because there's the sales groups associated with Toyota Motor North America (affiliated with Toyota Motor Corp) who service most of the country, and then there's Southeast Toyota Distributors (SET) who are independent of Toyota proper.

I found out about that subtle difference the hard way when I had a problem with a Toyota and expected Toyota to honor their advertisements. Turns out I bought from SET, so Toyota didn't care.

Re: Kill the laws that keep car dealers in business

#204

Post by grandalf »

bduerst wrote: post #195
grandalf wrote: post #187

Earlier quoted context omitted.

> Because of the massive depreciation on a new car the minute you drive it off the lot. Does the car depreciate? Or is it that it can no longer be sold as "new", making many of the incentives irrelevant. If the "new" car gets 0% financing, and the "used" car with one mile on it gets market rate, then of course there can be a higher sticker price on the new one.

You just answered your own question. The car depreciates because it is no longer new, a status which adds value for a segment of the market. Variables like manufacturer incentives may come into play for some makes, but that doesn't change the fact that it depreciates.

Sure but you are ignoring important information. The car itself has not depreciated. We are misattributing the depreciation. It's a different bundle of products. There is nothing intrinsically price-reducing about being driven one mile.

The lower price is due to various market failures or trust breakdowns, not b/c the car itself has changed.

Re: Kill the laws that keep car dealers in business

#205

Post by oldmanjay »

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.

"Trust me, my opinion is the right one" is not a terrifically compelling stance on HN.

Re: Kill the laws that keep car dealers in business

#206

Post by OopsCriticality »

grandalf wrote: post #187
rayiner wrote: post #174

Earlier quoted context omitted.

> - why can't I rent a car for a month and if I like it sign up for a year or two or three? Because of the massive depreciation on a new car the minute you drive it off the lot. > - trim levels are out of control and make inventory planning much worse. If the base model sells for $18K but is available in a $36K trim level, is it really the same car? Why not just keep it simple. There are a lot of trim levels in cars…

> Because of the massive depreciation on a new car the minute you drive it off the lot. Does the car depreciate? Or is it that it can no longer be sold as "new", making many of the incentives irrelevant. If the "new" car gets 0% financing, and the "used" car with one mile on it gets market rate, then of course there can be a higher sticker price on the new one.

In the case of electric cars, the state and federal incentives that help to make them attractive are available only when they are "new".

Re: Kill the laws that keep car dealers in business

#207

Post by strommen »

The only real consumer benefit that this article describes for factory-direct sales is cost savings from no longer carrying inventory. But that's a completely separate issue: there's no reason an indy dealer can't have a low inventory and custom-order new cars for all their customers.

Dealers carry a large inventory because it works. People (for the most part) want to pick out their specific car and drive it off the lot. They form an emotional connection with the car before they own it, and the dealer needs that emotional connection to close the deal. Going factory-direct with a wait time of several days would snap buyers back into logical reality, and car companies do not want that.

Re: Kill the laws that keep car dealers in business

#208

Post by Retra »

drzaiusapelord wrote: post #191
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…

> At least not Honda dealers. Used cars averaged around $1000 profit, but new cars were around $200. I went to the Honda dealer a month ago and test drove a new CRV. The salesperson refused to even consider budging from the MSRP. He let me walk when I said I would only consider going lower (largely based on Truecar pricing). I looked at the details of the cost and there were endless dealer fees on there as well. The…

"[T]he trade-in cost for my car they offered was literally half its market value."

I'm curious why you'd expect them to take it for more? They wouldn't do trade-ins if they couldn't profit off of them, and you can't buy things for market value and run a successful business.

If you want close to market value for your car, you have to sell it yourself. And if you think about why you didn't do that, you can see why it costs you something to do a trade-in.

Re: Kill the laws that keep car dealers in business

#210

Post by grandalf »

OopsCriticality wrote: post #206
grandalf wrote: post #187

Earlier quoted context omitted.

> Because of the massive depreciation on a new car the minute you drive it off the lot. Does the car depreciate? Or is it that it can no longer be sold as "new", making many of the incentives irrelevant. If the "new" car gets 0% financing, and the "used" car with one mile on it gets market rate, then of course there can be a higher sticker price on the new one.

In the case of electric cars, the state and federal incentives that help to make them attractive are available only when they are "new".

> only when they are "new"

Ahh yes, they must benefit the environment only when new :)

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