Buying cars from the manufacturers (price, illegal, running, cheaper)
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My personal thoughts are that I've seen plenty of arguments on why dealerships are a good thing. There are foreign countries where there are both dealerships and manufacturer-direct options for purchase. They each have their pros and cons. What I have never seen is a good argument as to why we should legally mandate that automobile manufacturers must go through dealerships. If dealerships really provide value then they'll continue to do so with or without the manufacturer opening stores, too. The problem I see is that too many dealerships provide no value at all and are simply clinging to their legal protection to justify their existence. I love my VW dealership. I can't imagine the manufacturer doing anything better. My Jeep dealership can die in a fire. There's no way the manufacturer can possibly be any worse. Get rid of these silly protectionist laws and let people decide for themselves.
I tend to agree with you. I just don't understand why people think the manufacturer would be a cheaper option. I also wonder how manufacturers would handle the trade side of the business without becoming defacto dealers.
Back in the early 90's when I was president of the local photography club there was an guy named John Eckert. In 1957 for his vacation (he was living in and working for Ma Bell in Casper Wyoming) he ordered a 1957 Rambler with overdrive, whitewall, AM radio, and deluxe wheel covers from AMC with half down. Then he and his 10 year old daughter took the train to Kenosha and picked it up at the factory and drove it back home. Got to meet George Romney who thanked him for his purchase! I've always been fascinated by that story. How times have changed! He was later in the 70's a AMC car salesman and when he died in 2001 was still driving a 80 model Concord he bought new. He lost the 57 in the 04/10/79 tornado and use to always say that was the only time it didn't get him home.
it is for us to keep paying ridiculous prices,,,,, to help pay for the thousands and thousands of retirees, and essentially the unions, and the high payrolls of the workers, and benefits
if you take the fluff out of a 20k vehicle and it is now 10k from the manufacturer,,,,,, the unions, and greased politicians would go nuts....
they have protected themselves with layers upon layers,,
also,, almost to the point of collusion and anti-trust laws,,,the dealerships have all colluded to protect themselves, when the internet got going,,,,,they dont want that one dealership selling that car 7k less than everyone else
otherwise most any individual can get licensed as a dealership ,, with no overhead ,,,and flip new vehicles....
without the mark up and fluffs of protecting the whole industry
the costs/invoice dealer mark ups,,,its all a spider web, and layers..
and its a real commodity to sell, meaning a ford fusion s is the exact same vehicle as a thousand dealers have ,, you would think by now,,,one dealership or dealer would say ok,,,ill sell for just above cost (true cost) and sell many more..
but again,,,the manufacturers have so many incentive/rebates/buy ups and buy downs....this is probly impossible
Its really no different than why you can't buy a lot of things directly from manufacturer I imagine.I think it might be a pain to have dealerships and service center in so many places as far as running them.
Its really no different than why you can't buy a lot of things directly from manufacturer I imagine.I think it might be a pain to have dealerships and service center in so many places as far as running them.
This is very, very different. The reason you can't buy a lot of things directly from the manufacturer is because the manufacturer chooses an indirect arrangement. If I build an automobile and then sell it to you (assuming you are not a licensed new car dealer) I am in violation of law in 48 states. There's no choice in the matter. I must find a dealer. The only other item I can think of whose distribution network is as legally protected is alcohol. In most states, the manufacturer cannot sell directly to the consumer but even in those situations most states have provisions for boutique brewers to sidestep this process for things like brewpubs.
I tend to agree with you. I just don't understand why people think the manufacturer would be a cheaper option. I also wonder how manufacturers would handle the trade side of the business without becoming defacto dealers.
It seems like they would be defacto dealers if dealers went away. If there weren't dealers, then there would have to be company showrooms instead where we could go for test drives and service, even if we didn't go there for purchase and instead had direct delivery to the home or something. Meet the new boss, same as the old boss? Maybe that would be better, maybe it wouldn't. But the auto companies would have to get way up to speed in running that part of the business.
It's not really a ton different from how we buy many other things I'd say. Almost anything we buy in a physical retail store is not from a manufacturer. It may also depend upon how you define manufacturer. In some parts of the clothing business, say, company stores for the brand are somewhat common. But do we call them the manufacturer when they outsource that to some plant in Bangladesh? Maybe we shouldn't. They are still in the business of marking up a product they didn't make. Even Apple could be considered that way. They don't own the factories, not even the one that is making stuff in the US. Exacting control over the product, yes, but they don't own the facility or directly employ the workers. Both Apple and some of those clothing companies (among many others) sell in company-owned stores and direct online as well as selling wholesale to other retailers. It's a weird way to operate, competing with the manufacturer for sales, but if the product is popular (think Apple, again) then other retailers will stock it because making some money on it and getting people into the store to buy other stuff is better than making zero on it.
Of course, there are in fact a few stores that really are branches of a manufacturer. I think. I'm trying to remember one off the top of my head, not doing that well. Trying to think of a company that is only a true manufacturer of everything they sell in their stores. (LL Bean, for instance, does I believe own at least one manufacturing facility in Maine but I don't think they own the overseas facilities which make many of their items.) I'm sure there are some. And there is one manufacturer trying to do that in the car business, the aforementioned Tesla. They are running afoul of laws in almost every state which are designed to protect car dealers from having to compete with the manufacturers.
You know what happens when I buy anything direct from any manufacture? I pay full MSRP.
Apple computers, full MSRP.
GoPro Cameras, full MSRP.
Patagonia Down Coats, full MSRP.
North Face Fleece, full MSRP.
TRX suspension trainer, full MSRP.
Bob stroller, nikon camera, Powerblock weights, all full MSRP.
These companies dont want to undercut their distribution network. It's a whole lot easier to make someone else finance a distribution network and pay for inventory, even in a keystone business like North Face and Patagonia have (where it costs $.25 to make, $.50 wholesale, and $1.00 retail) its just easier and more profitable to have someone else handle all that overhead.
Getting a car direct from manufacture would at best get you Invoice-holdback, so maybe a savings of 7%. But then there is increased shipping direct to your door, and issues in the supply chain, so there would have to be manufacture run dealerships, and those require overhead so we are right back to square one.
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Trying to think of a company that is only a true manufacturer of everything they sell in their stores. (LL Bean, for instance, does I believe own at least one manufacturing facility in Maine but I don't think they own the overseas facilities which make many of their items.) I'm sure there are some. And there is one manufacturer trying to do that in the car business, the aforementioned Tesla. They are running afoul of laws in almost every state which are designed to protect car dealers from having to compete with the manufacturers.
