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

Re: Kill the laws that keep car dealers in business

#11

Post by bgribble » Wed, Oct 28, 2015, 9:30 AM UTC

rlpb wrote: post #9

bgribble wrote: post #7

Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…

> Dealer protection laws are there because manufacturers have a long history of trying to steal from dealers, cheat them, and put them out of business at whim. That doesn't justify them. I thought the US is supposed to be anti-regulatory? Why didn't dealers handle this by becoming primarily multiple-manufacturer and thus able to switch to or favor a different manufacturer at whim?

That was the normal case in most of the US until pretty recently. Now manufacturers don't want competing brands in the same building. They want a uniform branded buying experience. So they make it very hard to transfer franchises if the new franchisee sells other makes at the same location. The manufacturer has refusal on the sale of the franchise, which is most of the dealership's value.

Re: Kill the laws that keep car dealers in business

#12

Post by btgeekboy » Wed, Oct 28, 2015, 9:30 AM UTC

adventured wrote: post #10

A long time ago I saw an ad on the back of a magazine, paying tribute to Dell's direct model. It was a Johnnie Walker ad, with a bar napkin. On the napkin was written Dell's business plan; it had "make computer, sell computer" basically crossed out, replaced with "sell computer, make computer." Make the car -> sell the car Sell the car -> make the car This switch should have happened a long time ago. The near total e…

That elimination of the inventory system works great for cars produced locally. What of those produced overseas, or even on the opposite side of the US? Consumers can handle waiting a week for a car they ordered, but you can't just throw a car into the UPS cargo hold and deliver it to the buyer's doorstep a day or two later.

Re: Kill the laws that keep car dealers in business

#13

Post by TeMPOraL » Wed, Oct 28, 2015, 9:31 AM UTC

bgribble wrote: post #7

Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…

Yeah. People think that because it works with Tesla, it will work with everyone, but they miss the point that Tesla is a pretty unique company - both because they're new to the market, and because under Elon's leadership, they have making the best possible car and electrification of world transport as a terminal goal, not as instrumental to simply getting more money. Other companies won't play nicely like this, because they don't have a mission to achieve.

Re: Kill the laws that keep car dealers in business

#14

Post by SixSigma » Wed, Oct 28, 2015, 9:34 AM UTC

bgribble wrote: post #7

Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…

Indeed. Let's not forget why direct sales are illegal - they used to be exclusive. It was even harder than in the OP because you walked from manufacturer to manufacturer.

Not that I don't think it is time for an overhaul or other models but ignoring history would be churlish.

You pay for the inventory costs of spoilage in other industries!

Re: Kill the laws that keep car dealers in business

#15

Post by bgribble » Wed, Oct 28, 2015, 9:34 AM UTC

adventured wrote: post #10

A long time ago I saw an ad on the back of a magazine, paying tribute to Dell's direct model. It was a Johnnie Walker ad, with a bar napkin. On the napkin was written Dell's business plan; it had "make computer, sell computer" basically crossed out, replaced with "sell computer, make computer." Make the car -> sell the car Sell the car -> make the car This switch should have happened a long time ago. The near total e…

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.

Re: Kill the laws that keep car dealers in business

#16

Post by adventured » Wed, Oct 28, 2015, 9:34 AM UTC

rlpb wrote: post #9

bgribble wrote: post #7

Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…

> Dealer protection laws are there because manufacturers have a long history of trying to steal from dealers, cheat them, and put them out of business at whim. That doesn't justify them. I thought the US is supposed to be anti-regulatory? Why didn't dealers handle this by becoming primarily multiple-manufacturer and thus able to switch to or favor a different manufacturer at whim?

The US is quite regulated overall and is anything but anti-regulation at this point. It has more laws governing its economy than any other nation, and adds thousands to that tally annually. It's not an exaggeration to say that nobody can keep up with it all, and that's before getting to the insane tax code. It hasn't been a classic free market of very low regulation, in nearly a century.

George McGovern - politician turned entrepreneur - wrote one of my favorite articles on the subject in 1992:

http://www.wsj.com/articles/SB100014240529702034064045780705...

Re: Kill the laws that keep car dealers in business

#17

Post by gedrap » Wed, Oct 28, 2015, 9:36 AM UTC

adventured wrote: post #10

A long time ago I saw an ad on the back of a magazine, paying tribute to Dell's direct model. It was a Johnnie Walker ad, with a bar napkin. On the napkin was written Dell's business plan; it had "make computer, sell computer" basically crossed out, replaced with "sell computer, make computer." Make the car -> sell the car Sell the car -> make the car This switch should have happened a long time ago. The near total e…

>>> The automaker never builds a car that hasn't already been sold.

I am not familiar with the industry, how long does it take to make a car and deliver it to the customer (let's assume to a major US city)?

Re: Kill the laws that keep car dealers in business

#18

Post by jpfr » Wed, Oct 28, 2015, 9:39 AM 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…

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.

Re: Kill the laws that keep car dealers in business

#19

Post by baddox » Wed, Oct 28, 2015, 9:39 AM UTC

bgribble wrote: post #7

Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…

I don't quite understand what you're predicting would happen if all dealer protection laws were removed. Car manufacturers would drive dealerships out of business, and...then what? Be happy not selling cars? I suspect they would still want to sell cars, and that's going to need some local presence.

Re: Kill the laws that keep car dealers in business

#20

Post by baddox » Wed, Oct 28, 2015, 9:40 AM UTC

TeMPOraL wrote: post #13

bgribble wrote: post #7

Yep, buying a car sucks. But this is one of the largest supply-chain operations in the world. The dealer franchise system and its legal framework have evolved over 100 years and are balanced pretty delicately. It can't just be refactored by waving a regulatory wand at it and hoping for the best. Cars will still have to be warehoused, delivered, serviced, and resold. Somebody has to buy your old junky trade-in. Somebo…

Yeah. People think that because it works with Tesla, it will work with everyone, but they miss the point that Tesla is a pretty unique company - both because they're new to the market, and because under Elon's leadership, they have making the best possible car and electrification of world transport as a terminal goal , not as instrumental to simply getting more money. Other companies won't play nicely like this, beca…

What does being new to the market or having a supposedly noble goal have anything to do with selling cars directly to customers?