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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

#221

Post by maxerickson »

OopsCriticality wrote: post #220
grandalf wrote: post #210

Earlier quoted context omitted.

> 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 c…

Incentives on new vehicle sales can change the fleet mix. I don't see how incentives on used sales can do that (there would be some more focus on resale value, but people already consider that).

I think in the US we would get the most mileage out of reforming CAFE to make it less friendly to daily driver trucks.

Re: Kill the laws that keep car dealers in business

#222

Post by rayiner »

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.

If I buy an Apple laptop, use it for a month, and return it, it'll be sold as a factory refurb, because it would no longer be "new." The discount on that will be 10-20% of the retail price. That's the depreciation just due to being "refurbished" versus "new." People would flip their shit if Apple resold 1-month used laptops as "new" at full retail price.

Applying a similar discount to cars, a 1-month "try before you buy" rental would cost the dealer $1,500 to $3,000 on a $15,000 car for each one that was returned. Apple because their products have large markups. A dealer can't, because they probably make less on each car (in absolute dollars) than Apple makes on a laptop or iPhone.

Re: Kill the laws that keep car dealers in business

#223

Post by toomuchtodo »

Amezarak wrote: post #148
jpfr wrote: post #18

Earlier quoted context omitted.

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?

Can you not get a car rental, provided by your insurance company, until you've purchased a new vehicle?

Re: Kill the laws that keep car dealers in business

#224

Post by mbreese »

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.

> not b/c the car itself has changed

It has nothing to do with that particular car, but rather the "unknowns" about that car. It could be a very nice car in about the same condition as when it was brand new.

When it is new, the car is a fixed entity. There is nothing unknown about it. Once you drive it off the lot, there is something unknown about the car - Where did you drive it? Was it in an accident? Did you drive it too hard? Did you change the oil when you were supposed to? Too much wear and tear? Did you spill something on the seats?

Because of that, once it is no longer new, the car has more risk associated with it, and thus loses value (in addition to value lost due to normal wear and tear). You could have driven only one mile, but that one mile could have been off a cliff for anyone knows.

Re: Kill the laws that keep car dealers in business

#225

Post by swatthatfly »

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.

> Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show.

Some people may benefit from this "service", but not me, nor any of the people I know. The only benefit I could see from my previous buying experiences is the act of handing out the key for a test drive. Everything else was simply designed to extract as much money from my pocket without giving me back anything in return. I had all the information I needed to make a purchase decision, the financing doesn't need to be done at the dealership, the car can be bought from a website, and delivered to the curb. A bunch of grown men sitting around all day and swarming people that enter the floor with the goal of "giving them a good deal" is not a value proposition. It's a complete misallocation of resources.

Re: Kill the laws that keep car dealers in business

#226

Post by MagnumOpus »

SideburnsOfDoom wrote: post #55
jpfr wrote: post #38

Earlier quoted context omitted.

Assembly lines require a huge investment and cannot scale beyond their maximum capacity. So when a car turns out to be popular, the OEM (the brand that does final assembly) or one of the many suppliers might run into a huge backlog. That is most pronounced when orders spike after the introduction of a new model.

This has nothing to do with the colour and seats though. When "your" car finally rolls of the line to should take ... what? 1 working day to spray it the colour that you want and let the paint dry, an hour to bolt in your choice of seats and Cd/Mp3 player.

And nobody claimed otherwise. Order backlogs introduce the large delays; manufacturing/shipping takes days or at most two weeks.

Re: Kill the laws that keep car dealers in business

#227

Post by jaynos »

JoeAltmaier wrote: post #200
ethbro wrote: post #199

Earlier quoted context omitted.

To compare and contrast the two methods of research/purchase: both online and in person feature the same marketing jargon. Online: You can perform further self-guided research to discern what these terms actually mean and whether you need those features or not. Furthermore, you can see what other people thought about those features. In Person: You can have the salesperson explain those terms to you. Except... do you…

In person is there for one reason: so the salesperson can direct the dialog, completely control the conversation. They are heavily trained in the dance of sales, and its all in their interest and not yours. The primary reason to get the dealership out of the picture is, to get the salesperson out of the picture. You don't buy a toaster that way, or even a house. Why a car?

>so the salesperson can direct the dialog, completely control the conversation.

And direct you towards something they have in inventory, not the configuration you came up with on the manufacturers website.

Re: Kill the laws that keep car dealers in business

#228

Post by mikeash »

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.

There's nothing intrinsic about prices, period. It's all about what people are willing to pay.

People are willing to pay a substantial premium for a car that is completely brand new, as compared to a car that is very nearly new but has been driven by another person for a short time.

That's all it takes to be able to say that a new car depreciates substantially the moment you take it home.

Re: Kill the laws that keep car dealers in business

#229

Post by venning »

drzaiusapelord wrote: post #190
venning wrote: post #132

Earlier quoted context omitted.

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…

>. Taxi drivers didn't necessarily lobby for market restrictions Drivers are out in the street protesting anything that allows ride sharing and demanding further restrictions. The idea that employees are innocents is riduculous. This ignores 100+ years of unions, associations, legislation, etc. Its the rank and file demanding these laws, not shadowy men cutting backroom deals. If these deals get made its because the…

There is a difference between the creation of the status quo and the defense of it.

> ...out in the street protesting...

> ...Chicago Teacher's Union marches...

> ...cab drivers block streets...

Your examples are all of its defense which, while understandable, is largely ignorant of the protections' unintended consequences. My earlier comments addressed the creation of those protections and the effects of their inevitable repeal.

> The idea that employees are innocents is riduculous.

I in no way implied innocence of any party.

> This seems to be politically biased.

Not that it matters, but I am contractually obligated to not display political bias in public. Even without that, as a matter of course and as a non-political resident of Capitol Hill, I avoid politically-biased discussion.

Re: Kill the laws that keep car dealers in business

#230

Post by mikeash »

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 :)

Incentives on used car sales would be redundant, because the incentive gets baked into the price of the used car. A new Tesla gets a $7,500 tax credit when purchased in the US right now. If you turn around and sell it, you'll have to discount it by about $7,500 to account for the fact that you're competing with new cars that have that incentive.
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