Maybe dealerships served a purpose at one point, but today they are totally unnecessary. They are needless middlemen who exist only to jack up the price of vehicles.
Edit: this is the bullshit that needs to be undone. Dealerships should not be protected by unnecessary laws that force consumers and producers to use them.
Autoblog reports that the California New Car Dealers Association claims the direct sales strategy violates a 2023 amendment to California’s State Vehicle Code which prevents automakers and their affiliates from bypassing their franchise dealerships.
The original purpose was so the dealership wouldn’t put all the money into their business only to have the OEM pull the rug out from under them. And that seems like a totally legit reason.
A lot of the laws because of this are, if you enter into a dealership agreement, you can’t exit.
So Tesla and Rivian are in the clear in a lot of places. Where things get bat shit fucked is where the dealerships then step in to get the laws changed to say all OEMs must use a dealership. Now it’s not about protecting their investment it’s just mafia type shit.
That being said, I think VW spinning off a new company scout to bypass the rules they signed up for as VW is breaking the spirit of the agreement and I wouldn’t be surprised if it was a legal violation as well. Otherwise the dealerships could have put all this money in, then they spin up VW2.0 and transfer all assets to the new Corp and the dealerships get fucked.
The contract between the dealer and manufacturer doesn’t need to be any more complicated than what occurs between a McDonald’s and a franchise location.
Manufacturers should just have showrooms with repair centers. One or two of each car so people can see them and test drive if needed. They would take up far less room, and everyone would have places to take warranty repairs still. They cut out the middlemen so repairs for normal things could possibly even be less. They send the parts to themselves so the parts don’t need markups. Dealer fees no more and ship them to either their house or to the showroom for pickup if the buyer wants.
Is this not functionally how things are now except it’d take away all same day inventory sales possibility?
Maybe the incentives model would change, but that’s not guaranteed, and they’d likely still charge destination fees, but maybe not the hyperlocal supply demand fees., so I guess people would save on that potentially.
Right now cars are sold to dealerships and then are resold at higher prices to consumers while throwing in fees, markups and any possible way they can come up with a way to get you hooked on an interest rate that they have made kickbacks and deals with financing companies to ensure they can sell more cars.
A car salesmans job is to make money off charging you as much as they can. They often make 100-150k a year. That’s all money that comes from the purchasers who would have just paid the manufacturer for the product they wanted, and not have situations where you are haggling to get a decent price and finding out most everyone is getting taken advantage of.
The numbers vary but in general you are likely paying 3 grand more than what you would have if you bought directly from the manufacturer. Some places are saying 10% markups, so that’s 5k on the average new car purchase being around 50k.
Twice the median wage is nothing nowadays tbh. Inequality in my country isn’t even that bad compared to the US, but for an example, to be a sole provider for a family, you need to be making about twice the median, unless you don’t have rent or a mortgage to pay. This used to be possible with just median in the US I believe, but I somehow doubt it is now.
Fair enough. It’s just that while I do hate sleazy salesmen myself, they get a lot of hate when really they’re no different from the rest of us trying to make a buck in this rat race to keep food on the table the next day. It’s just that they’re in a position where their behavior directly affects their income and most the rest of us are not.
It isn’t a LOT of money but it is drastically more. Where I live you can survive making around 35-40k. The way I see it is that is your baseline requirement. So someone who makes 60k has about 20-25k spending money to improve their situation. Someone making 150k has 110-115k to improve their situation. So I would argue they are in practice more than 5 times richer. $55/day spending vs $301/day.
the american system with car dealers, and how they fuck people, is intrinsically connected to how the financing for them works.
I cant tell you what the numbers are because Im a non-american car dealer person, but the system in the US is built around the fact that the dealers can ruthlessly mark up the price. depending on the manufacture company too.
(for context Im a Canadian Toyota dealer that is strictly MSRP and no haggle , although I admittedly work for a very good dealership. 95% of the time the only complaint or drama we ever get is people just complaining that its taking too long for their order to arrive or get fulfilled
I dont think I’d stay in the industry if I had to work at another one though. The bar is very very low for the field. constantly being pulled down by people exactly like you describe, in my town there is I think 8 car dealerships (new ones at least), and 4 of them are owned by one man. and he’s a total sleazebag. he tried to poach me once, fuck that
Fuck 'em.
Maybe dealerships served a purpose at one point, but today they are totally unnecessary. They are needless middlemen who exist only to jack up the price of vehicles.
Edit: this is the bullshit that needs to be undone. Dealerships should not be protected by unnecessary laws that force consumers and producers to use them.
The original purpose was so the dealership wouldn’t put all the money into their business only to have the OEM pull the rug out from under them. And that seems like a totally legit reason.
A lot of the laws because of this are, if you enter into a dealership agreement, you can’t exit.
So Tesla and Rivian are in the clear in a lot of places. Where things get bat shit fucked is where the dealerships then step in to get the laws changed to say all OEMs must use a dealership. Now it’s not about protecting their investment it’s just mafia type shit.
That being said, I think VW spinning off a new company scout to bypass the rules they signed up for as VW is breaking the spirit of the agreement and I wouldn’t be surprised if it was a legal violation as well. Otherwise the dealerships could have put all this money in, then they spin up VW2.0 and transfer all assets to the new Corp and the dealerships get fucked.
Solid points, but we want the dealerships to get fucked. Slimy parasitic middlemen.
The contract between the dealer and manufacturer doesn’t need to be any more complicated than what occurs between a McDonald’s and a franchise location.
Manufacturers should just have showrooms with repair centers. One or two of each car so people can see them and test drive if needed. They would take up far less room, and everyone would have places to take warranty repairs still. They cut out the middlemen so repairs for normal things could possibly even be less. They send the parts to themselves so the parts don’t need markups. Dealer fees no more and ship them to either their house or to the showroom for pickup if the buyer wants.
Is this not functionally how things are now except it’d take away all same day inventory sales possibility? Maybe the incentives model would change, but that’s not guaranteed, and they’d likely still charge destination fees, but maybe not the hyperlocal supply demand fees., so I guess people would save on that potentially.
Right now cars are sold to dealerships and then are resold at higher prices to consumers while throwing in fees, markups and any possible way they can come up with a way to get you hooked on an interest rate that they have made kickbacks and deals with financing companies to ensure they can sell more cars.
A car salesmans job is to make money off charging you as much as they can. They often make 100-150k a year. That’s all money that comes from the purchasers who would have just paid the manufacturer for the product they wanted, and not have situations where you are haggling to get a decent price and finding out most everyone is getting taken advantage of.
The numbers vary but in general you are likely paying 3 grand more than what you would have if you bought directly from the manufacturer. Some places are saying 10% markups, so that’s 5k on the average new car purchase being around 50k.
True
That’s… Not a lot of money though. Stop blaming the salespeople, start blaming the legally mandated stealerships.
Twice the median wage is nothing nowadays tbh. Inequality in my country isn’t even that bad compared to the US, but for an example, to be a sole provider for a family, you need to be making about twice the median, unless you don’t have rent or a mortgage to pay. This used to be possible with just median in the US I believe, but I somehow doubt it is now.
Fair enough. It’s just that while I do hate sleazy salesmen myself, they get a lot of hate when really they’re no different from the rest of us trying to make a buck in this rat race to keep food on the table the next day. It’s just that they’re in a position where their behavior directly affects their income and most the rest of us are not.
It isn’t a LOT of money but it is drastically more. Where I live you can survive making around 35-40k. The way I see it is that is your baseline requirement. So someone who makes 60k has about 20-25k spending money to improve their situation. Someone making 150k has 110-115k to improve their situation. So I would argue they are in practice more than 5 times richer. $55/day spending vs $301/day.
You can raise a family one fairly easily.
Anyways… that’s off topic haha
the american system with car dealers, and how they fuck people, is intrinsically connected to how the financing for them works.
I cant tell you what the numbers are because Im a non-american car dealer person, but the system in the US is built around the fact that the dealers can ruthlessly mark up the price. depending on the manufacture company too.
(for context Im a Canadian Toyota dealer that is strictly MSRP and no haggle , although I admittedly work for a very good dealership. 95% of the time the only complaint or drama we ever get is people just complaining that its taking too long for their order to arrive or get fulfilled
I dont think I’d stay in the industry if I had to work at another one though. The bar is very very low for the field. constantly being pulled down by people exactly like you describe, in my town there is I think 8 car dealerships (new ones at least), and 4 of them are owned by one man. and he’s a total sleazebag. he tried to poach me once, fuck that