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I think the "ugly duck" in this conversation is a stripped down bare-bones version, which inevitably will sell. At least get people in the door and go from there, "for only $2,000 more you can get A/C, power windows, etc"
Exactly. I'm not sure what was so hard to understand about that concept.
Exactly. I'm not sure what was so hard to understand about that concept.
Your quote: "Actually, it is not uncommon for a dealer to have in stock one ugly duckling. It is usually ordered for a sales promotion, is priced at a rock bottom level, and the dealer hopes it does NOT sell. It might be missing an expected option, or more likely, an odd ball color. "
That bold comment is where I 100% disagreed with you. I do not believe, under any circumstance, that a dealer stocks a car where they hope it does not sell. Dealers want ALL their cars to sell....sure they order cheap ugly-ducks as you call them to advertise a low payment, but I don't buy for one minute a dealer hopes they don't sell them. (You can order more ugly ducks just like it to take it's place....)
I so BADLY want to do away with the dealership model, not because I think it will save me money, but because buying a car is a terrible experience. I just hate nothing more than the hours-long process of haggling, paperwork, and misery that comes along with buying a car.
If I want a new Mercedes SUV, for example, I want to buy it for MSRP off of their website and have it shipped to my address. If MSRP is too high, then they can adjust it down to what the cars actually sell for, just like every other consumer-facing business that doesn't use a salesperson model. If I could buy it from Amazon, even better. Dealerships work by hiding the price from you and forcing you to do the research; imagine a world where a car is sold by companies that have to publish the selling price and sell it for that price (without "prep fees" and other garbage).
I would love to see dealerships move towards a "service only" model. I hate buying through them but agree that it's helpful to have brand-specific repair experts available to perform warranty service. These service centers could still offer test drives.
Hire a broker to do your deal for you. If you have that kind of money to throw around, a few hundred bucks for a broker will be child's play.
I understand that, my point is you would just replace existing dealers with different dealers. What does that accomplish? If you're going to make a change to eliminate dealers, then these service centers would need to be factory-owned, not through a 3rd party individual or business.
Not to mention you have to address how to handle trade-ins. These parts & service only stores probably won't be set up for that.
If a manufacturer wanted to control the distribution of the new product (which they don't) then they could give each of their current dealers a cash settlement to cover the net worth of the sales part of their franchise. They would need some compensation if this was taken from them. Pretty much all state franchise laws cover this type of thing.
Your point was that the cost would not go down because manufacturers would have to open brick and mortar stores and maintain them. My argument was that there is already a way around opening their own dealerships and to mitigate the risk of doing so. There are part stores that could align with manufacturers to sell their parts, and independent repair facilities that they could align with very easily to avoid having to open a brick and mortar store in every city.
Manufacturers could set up smaller "kiosks" ran by a few people that have a couple of display cars for people to test drive and look at. Then they could order the car they want either through the kiosk or online. They would pick up their car at the kiosk when it is delivered. The main difference is that ownership of the car isn't transferred from the manufacturer to the dealer to the customer but instead from the manufacturer straight to the customer. This would allow for a footprint about 1/4 the size (or smaller) than current dealerships that take up acres of land.
There are other options...... it isn't difficult to find them if one looks. Since you say you work with dealers though I assume your motivation to be against this model is personal and I understand that. But at the end of the day, the way we purchase consumer products is evolving.
Your point was that the cost would not go down because manufacturers would have to open brick and mortar stores and maintain them. My argument was that there is already a way around opening their own dealerships and to mitigate the risk of doing so. There are part stores that could align with manufacturers to sell their parts, and independent repair facilities that they could align with very easily to avoid having to open a brick and mortar store in every city.
Manufacturers could set up smaller "kiosks" ran by a few people that have a couple of display cars for people to test drive and look at. Then they could order the car they want either through the kiosk or online. They would pick up their car at the kiosk when it is delivered. The main difference is that ownership of the car isn't transferred from the manufacturer to the dealer to the customer but instead from the manufacturer straight to the customer. This would allow for a footprint about 1/4 the size (or smaller) than current dealerships that take up acres of land.
There are other options...... it isn't difficult to find them if one looks. Since you say you work with dealers though I assume your motivation to be against this model is personal and I understand that. But at the end of the day, the way we purchase consumer products is evolving.
Not personal, could not care one way or the other if dealers went away as I've said all along that each OEM should be able to decide whether they use dealers or not.
If you have a Carquest or whatever sell parts on behalf of an OEM then guess what, they are a dealer, too. I don't see what this accomplishes. There would still be a 3rd party in-between the manufacturer and the customer, and that 3rd party will have additional costs to handle this extra workload if that was given to them. (They'd need bigger stores, more people, etc.) Then on top of that you still need to set up service points, too, so it's not that easy to set up a full parts & service network.
People say the way we purchase consumer products is evolving but that really hasn't happened with cars yet. People still primarily buy cars out of stock even though anyone can order a car just like they want it. Even if they could order at a kiosk today, it will still take 30-60 days to get that car, and for most they aren't willing to wait that long.
Not personal, could not care one way or the other if dealers went away as I've said all along that each OEM should be able to decide whether they use dealers or not.
If you have a Carquest or whatever sell parts on behalf of an OEM then guess what, they are a dealer, too. I don't see what this accomplishes. There would still be a 3rd party in-between the manufacturer and the customer, and that 3rd party will have additional costs to handle this extra workload if that was given to them. (They'd need bigger stores, more people, etc.) Then on top of that you still need to set up service points, too, so it's not that easy to set up a full parts & service network.
People say the way we purchase consumer products is evolving but that really hasn't happened with cars yet. People still primarily buy cars out of stock even though anyone can order a car just like they want it. Even if they could order at a kiosk today, it will still take 30-60 days to get that car, and for most they aren't willing to wait that long.
And dealers would hate that model as most would probably come to their senses and realize a $600/month payment just isn't in the cards. You would get a lot of remorseful buyers cancelling contracts.
And dealers would hate that model as most would probably come to their senses and realize a $600/month payment just isn't in the cards. You would get a lot of remorseful buyers cancelling contracts.
Bingo. A salesman's goal is to get you in the car TODAY and to get you to sign the bottom line before the excitement of getting that shiny new vehicle subsides and the feeling of regret and discomfort can kick in. By having a "cooling off" period people have more of an opportunity to rationalize their decision and change their minds before going upside down in a loan.
Granted, this would need to be a grace period with a cut off date so that people aren't cancelling contracts on vehicles once they are being delivered, but there would likely be a period where they could for minimal fees.
Part stores do not have to stock the parts. They have extremely large warehouses that have enough space to stock the parts. What they are called is irrelevant. How they do business is what matters.
Dealerships mark up a car and sell it to you. Then they mark up parts when they sell them to you. Then they mark up service when they sell it to you. Everything is designed to force you to use a dealership with high markups to get your work done. Because dealerships are so large, their overhead is much higher. When a service shop isn't paying overhead for parts counter people, warehouse space, etc.... their overhead is lower and in turn their shop rates are lower. When part stores don't have overhead for a sales department, shop techs, etc... their overhead is lower.
Really sit back and think on this one a bit. The answer is there if you want to see it.
Bingo. A salesman's goal is to get you in the car TODAY and to get you to sign the bottom line before the excitement of getting that shiny new vehicle subsides and the feeling of regret and discomfort can kick in. By having a "cooling off" period people have more of an opportunity to rationalize their decision and change their minds before going upside down in a loan.
Granted, this would need to be a grace period with a cut off date so that people aren't cancelling contracts on vehicles once they are being delivered, but there would likely be a period where they could for minimal fees.
Part stores do not have to stock the parts. They have extremely large warehouses that have enough space to stock the parts. What they are called is irrelevant. How they do business is what matters.
Dealerships mark up a car and sell it to you. Then they mark up parts when they sell them to you. Then they mark up service when they sell it to you. Everything is designed to force you to use a dealership with high markups to get your work done. Because dealerships are so large, their overhead is much higher. When a service shop isn't paying overhead for parts counter people, warehouse space, etc.... their overhead is lower and in turn their shop rates are lower. When part stores don't have overhead for a sales department, shop techs, etc... their overhead is lower.
Really sit back and think on this one a bit. The answer is there if you want to see it.
The grace period is when you sign the contract and when you take possession of the car. No reason you can't ever cancel a deal if you don't have possession of the car. Having a week/month to think about it does help rationalize the deal.
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