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

Re: Kill the laws that keep car dealers in business

#211

Post by drzaiusapelord » Wed, Oct 28, 2015, 4:33 PM UTC

Retra wrote: post #208

drzaiusapelord wrote: post #191

Earlier quoted context omitted.

> 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 c…

I expected a bit more than 50%. Anyway, my argument isn't about trade-in sales, its about typical profits of dealerships. They absolutely do not make "only $200" per car. When you factor all the things they typically do, they can and easily do thousands per car sale.

Re: Kill the laws that keep car dealers in business

#212

Post by sgustard » Wed, Oct 28, 2015, 4:34 PM UTC

jasonkester wrote: post #24

This seems like an opportunity for an Uber/AirBnB move. Find a jurisdiction anywhere in the USA where direct manufacturer sales are legal. Negotiate with the manufacturers to handle direct-to-consumer sales for them. Write your "app" so that customers can build their car online and have the order go straight to the factory. Charge the customer a "delivery fee" to get their heavily discounted car to them, from which y…

One such startup is Roadster.com. They aren't taking on the dealers yet, just making the process easier on the customer. Lots of dealers want to move more sales online and reduce spending on their sales staff.

Re: Kill the laws that keep car dealers in business

#213

Post by chengiz » Wed, Oct 28, 2015, 4:35 PM UTC

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…

> Most people don't need to buy a car overnight

Simply not true in America, at least the poor half of America. Perhaps most people don't need to buy a new car overnight. But a car? They do. Cars break down, get in accidents. You need to drive to your job or you lose it. You need a car.

Re: Kill the laws that keep car dealers in business

#214

Post by gruez » Wed, Oct 28, 2015, 4:36 PM UTC

strommen wrote: post #207

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…

what about the commission the dealer makes off each sale?

Re: Kill the laws that keep car dealers in business

#215

Post by nickff » Wed, Oct 28, 2015, 4:37 PM UTC

strommen wrote: post #207

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…

If car companies "do not want" to sell direct, why did the dealers in so many states lobby for laws which guarantee that the manufacturers cannot sell directly to consumers?

Re: Kill the laws that keep car dealers in business

#216

Post by bduerst » Wed, Oct 28, 2015, 4:39 PM UTC

grandalf wrote: post #204

bduerst wrote: post #195

Earlier quoted context omitted.

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.

That's a equivocation fallacy on the semantics of the word depreciate.

There are many different types of value that are reflected in the market price of a good. Cars that are no longer new lose value, thus by definition they depreciate.

Re: Kill the laws that keep car dealers in business

#217

Post by gutnor » Wed, Oct 28, 2015, 4:44 PM UTC

strommen wrote: post #207

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…

It is interesting that in Europe, buying a car means going to the factory-franchised dealer, order and wait several months to get your car. The only car I bought new took 6 months to be delivered and that car model had existed for over 2 year before I ordered it, so it was not a new or recently refreshed car.

When you buy a show-room car, or an in-stock car (km 0 car), you expect a significant discount (10 -> 20% off) over the discount you generally expect (i.e. not much nowadays except maybe free metal paint or free alloy wheels upgrade)

There are few generalist dealer that do multi-brand dealer where you buy in stock car. The interest to go to those dealers is that they indeed have the car in stock and generally with a good discount over the factory-direct sales, or provide configuration that are not available in your country[1].

[1] Factories provide different pack and dependencies between options is different EU countries. For example, a car I was looking at requires luxury electric seats in order to install 360 camera in Belgium. It is available as a standalone option in Spain on most trims, but is restricted to the most expensive trim in the UK. The EU is weird like that.

Re: Kill the laws that keep car dealers in business

#218

Post by AnimalMuppet » Wed, Oct 28, 2015, 4:44 PM UTC

venning wrote: post #132

Rumford wrote: post #115

There are some interesting comments in here about how tough the struggle is for car dealerships, but I don't think that necessarily justifies their existence or mitigates the point of this article. If what the dealerships do is valuable enough to the customer, they would exist even without the ban on direct sales. But I think we can all intuit that if the ban were lifted, buying a car would be a very different (and b…

We often moan about the taxi industry, the hotel industry, or the dealer associations but, in doing so, we miss something very important. The players in that industry often existed for years or decades in a state of government-backed protection without realizing it . Taxi drivers didn't necessarily lobby for market restrictions; they took advantage of the oligopoly, sure, but not necessarily consciously. If you live…

Some fences need to remain. Take barbers/hairdressers, for instance. It turns out that a barbershop can be a great place for spreading head lice. You want your barber/hairdresser to be trained to prevent that. That's part of what their licensing is about.

So, are there any aspects of being a car dealer that are worthwhile fences? Offhand, I can't think of any, but that doesn't mean there are none.

Re: Kill the laws that keep car dealers in business

#219

Post by it_learnses » Wed, Oct 28, 2015, 4:45 PM 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…

tangential questions: why did you pause your career? Did you regret pausing it? were you easily able to get back in?

Re: Kill the laws that keep car dealers in business

#220

Post by OopsCriticality » Wed, Oct 28, 2015, 4:47 PM UTC

grandalf wrote: post #210

OopsCriticality wrote: post #206

Earlier quoted context omitted.

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 :)

Thinking only of the environmental impact, I'd expect any new car regardless of energy source to be far worse than a used car.

Given the increased prices in the used car market (arising in part due to better durability and quality), I think I might be able to make an interesting argument for incentives towards purchasing used cars as being better for the environment than incentives for purchasing brand-new electric cars.