This article takes an off-the-cuff comment from the CEO of Ford and reads too much into it IMO. He wasn’t saying dealerships are going away; he was actually saying the opposite. The point he was making was that Ford is going to adopt some of Tesla’s practices while using the dealership network to compete with them.
Here’s the quote with more context:
“I believe for retail, we have to -- it's kind of like what happened between Amazon and Target. Target could have gone away, but they didn't. They bolted on an e-commerce platform and then they used their physical store to add groceries and return -- make returns really much easier than Amazon. They used their expertise as a physical retailer to their advantage, but they modernized the e-commerce piece. So it would be really easy to do business with them. It's exactly what we have to do on the retail side. We got to go to non-negotiated price. We've got to go to a 100% online, the vehicle there is no inventory goes directly to the customer, 100% remote pickup and delivery, but then we have this opportunity to use our physical presence, they outperform them. Like, I believe some Mach-E and Lightning customers would love to have a Mustang for the weekend. Maybe they want a Super Duty. I can do that, they can't do that, unless they ran a Ford.”
Ford reorganized back in March so that their EV business (Model e) is separate from the legacy ICE business (Ford Blue). There was speculation at the time that this was in part free itself of the dealership sales model. The dealers would keep the dying ICE business while the fast growing EV business would start with clean slate. Farley was quoted describing the EV sales model as:
> "It's going to be much more efficient, a lot more online. It's going to be a really different model."[1]
Obviously this will be very controversial and subject to interference by state legislators who have often protected dealerships. Will be interesting to see this transition.
> They want to protect that recurring service bay revenue. Oil changes, plugs, belts, etc.
In the past decade we've had one new ICE car and two new EV cars.
The ICE car has been in the dealer once for a couple hours to replace rear hatch support struts (nothing to do with the engine, so could happen to any EV that has a hatch).
The EV cars have spent many weeks in the dealer for repairs and waiting for parts. Also issues unrelated to the engine, this was for door lock problems and window regulator problems.
In theory the EV motor is simpler than the ICE engine. But in practice, the ICE engines are bulletproof and almost never have problems. In 36 years of owning cars, I've never had a car in a shop (or dealer) for engine issues. It's always electrical system, electronics, seats, windows, shocks, etc. Components that both ICE and EV cars share.
I am not saying this isn't true, but EV's have a set of maintenance requirements too - there are still a lot of mechanical parts - tires, suspensions, doors, etc. Not to mention electronic maintenance but I guess dealerships would have to re-train, re-certify, and re-tool technicians for that
Edit: I think I relied to the wrong comment on this sub-thread, but this still contributes, I think.
My spouse and I recently purchased an extremely difficult to find plug-in hybrid EV. We had placed a hold on a specific vehicle destined for delivery to the dealership a few months later. We paid a deposit and signed a receipt that made reference to that vehicle and was given the final price sheet for that specific vehicle at deposit time.
Two days before we were scheduled to pick it up (more than two months after we put the deposit down) the sales guy called and said that the dealership had instituted a new policy on the first of the month that no sales of that specific model and trim level would be authorized by the deal desk without an interior and exterior water resistant coating, and that the lowest price he could offer was an additional $2,500.
As you can imagine that did not stand up to scrutiny and we walked out of there with the vehicle at the total price recorded in the initial paperwork. They signed on the dotted line and never said a word about any new policies until we were ready to pick it up. They did this in a U.S. state where that practice is not legal.
You bet we told Toyota about that when they sent the survey.
If they weren’t making enough to meet their needs then they should have known that when they were negotiating.
Just for reference, I've had a Honda Fit for 13 years, and the only maintainance I've had done over what you no doubt had to do on your TM3 (tires, wiper blades) has been oil changes. The car has 164k miles on it.
I'm not saying the EV's are not theoretically more durable and (much) less maintainance-intensive. I am saying that the best of the best ICE vehicles are not as different as your observation about your own TM3 tries to suggest.
You're supposed to do more maintenance than that on your Honda Fit, such as spark plugs every 30k. Granted, it isn't much compared to other ICE cars, but you're downplaying the difference. Your car also has parts that frequently break on all ICE cars, such as a water pump, which simply don't exist on BEV cars.
> Your car also has parts that frequently break on all ICE cars,
Well, theoretically yes. The point is that saying "my TM3 has 25k miles and zero maintainance" is worse than anecdata. It's no better than saying "My Fit has had almost zero maintainance at 164k miles". Far better to list the parts and systems not found in an EV, possibly along with likely maintanance schedules.
The spark plugs on the Fit are likely failing right now, btw.
I’ve only had my Y for four months now, but I’ve had this very unexpected feeling towards the car (and any EV). I can only describe it as an amalgamation of clean, elegant, and freeing.
While driving there is no engine noise, no unpredictable or delayed acceleration, no need to visit a gas station and have gas drip down the side of the car, and the knowledge that the drivetrain is simple and reliable and isn’t saturated with petroleum products.
I’ve owned some very nice BMWs before the Y, and while I greatly miss the suspension performance I can’t imagine going back to ICE.
Exactly. Tires, wipers, and I’m guessing alignment are the only things the average Tesla owner will ever need to worry about from what I’ve read before I took the leap.
The best description of my experience switching to an EV is that it’s been like going from a VCR straight to streaming. It’s fast, convenient, modern, and doesn’t really degrade.
How far back did you look? It wasn't that long ago that Telsa had problems with the drive units failing early, there've been a number of recalls for assembly problems, overly verbose logging and eMMC failures, touchscreen failures, etc.
Excuse my ignorance, but how I understand is that ICE can't be sold directly to the customers, so that's why dealerships exists (?), so my question is, are EV not regulated or treated differently than ICE?
Telsa insisted on it's direct sales model and it was more politically expedient for regulators in many states to carve out an exception to the dealership requirement only for car companies that sell EV's exclusively (only tesla at the time).
While I suppose this didn't seem like a huge threat to the car dealership lobby in each state at the time it's clearly come back to bite them and is the main reason Fords Electric vehicle production and distribution is a different 'car company' on paper, so that they can take advantage of legislation designed for tesla.
Tesla also points out that its prices are fixed, and its salespeople are paid primarily on salary, not commission. “Customers will never be rushed into a purchase, haggle over the price of the car, wonder if they could get a better deal across town, or puzzle over confusing add-on products, like GAP insurance or rust-proofing.”
Back in the 1930s, the car companies established this system so that they could worry about making cars, and the franchises could worry about selling and repairing them.
Early on, though, the franchisees lobbied their state governments for protection. They feared, among other things, that the giant car companies could open up their own stores across the street, cut prices, and crush the franchise like a bug.
To prevent that kind of abuse, all 50 states passed “dealer franchise laws.” They protected the dealerships in various ways—including barring any car maker from selling directly to consumers.
Those laws didn’t foresee the modern era. What they meant, of course, is that “no car company that has franchises can sell directly to consumers.”
They weren’t even thinking about companies that don’t have franchises, because there weren’t any at the time.
Over the years, Tesla’s legal team has gone from one state legislature to another, pointing out how that rule has become outdated, and suggesting that it get changed. In some cases, they succeeded.
In others, though, Tesla is running into a tougher obstacle.
I believe the dealership network exists for historical reasons and car companies can't get rid of them for their existing models. Now's the time to change that using EVs as a reason. But it's something many car manufacturers would've liked to start doing 5-10 years ago.
Personally, I think theres ~50% chance Ford will have to split into two companies (separate stock ticker etc.) to be allowed to have an EV only, no-dealership, sales model,
> This article takes an off-the-cuff comment from the CEO of Ford and reads too much into it
Ford announced 3 months ago that they were forming a new corporation, Ford Blue, whose purpose is to skirt state dealership laws in order to lawfully sell these EVs direct to consumers. So this is definitely not just a comment.
I’m skeptical that this reorg will allow Ford to sell direct to consumers, and I haven’t seen any reporting saying that it will.
Notably, Ford has explicitly said they’re not doing that: “We’re not keeping dealers in the mix 'for the moment.' We are betting on dealers for the long term. I want to make that really clear. I’m not mincing words. We will have new standards and a new experience. But we learned a lot by watching Tesla."
Maybe going direct is the secret plan, but I don’t see how they get there.
I think it's also worth noting that Ford has an obscene number of fleet sales compared to the brands most people here buy. Some dealers will stick around for the same reason Caterpillar dealers exist despite those products not being the kind of thing you "just go to a dealer and buy".
> Maybe going direct is the secret plan, but I don’t see how they get there.
Yeah, the dealership and the state level dealership associations aren't going to go out of business without some good fight. Even though I personally don't like the markup to be paid at the dealerships, but they exist for some good reasons: educate the consumers, financing, DMV paperwork and most importantly service your vehicles. EVs need much less service visits but when they do - it's likely harder for DIYers to tinkle with High Voltage battery systems and/or the infotainment firmware diagnostics and updates.
Every dealership I've been to has been more interested in feeding me whatever line of crap they think will get me to buy a car, not actually educating me about the different products available.
>> financing, DMV paperwork
Tesla and Carvana have proven these can be taken care of without a third party dealership. In most cases, financing is provided by a bank or credit union, not the dealership itself
>> and most importantly service your vehicles
Unless the fix is covered by warranty, I'm not taking my car anywhere near a dealership. They charge considerably more money than my trusted mechanic. My Hyundai dealership wanted $125 just for an oil change on a 2013 Sonata.
In theory, a dealership could be good for all of these things. In practice though, they suck. There is a reason most people hate car dealerships.
I had a dealership quote me $2600 for a required service package. The price of the parts was $400. It’s a bit of work but the labor was effectively over $366 per hour. I could have had the job done by an independent shop for $1000. When I pushed back, the service manager said he could do it for $1500.
I have a recall repair on the car as well so I think my final move is to use that as leverage to push the price down further. Getting the repair done by the dealer gets you a warranty by the manufacturer, which is the only additional value that I see.
> No, the warranty exists regardless of where the car is serviced.
I'm not sure if that's true for Ford, but this is in the owner's manual for the Nissan GT-R.
> OBTAINING WARRANTY SERVICE
> You must take the vehicle to an authorized Nissan GT-R Certified dealer in the United States or Canada during regular business hours at your expense in order to obtain warranty service.
> WHAT IS NOT COVERED
> Repairs performed by anyone other than a Nissan GT-R certified dealer.
> Repairs performed by anyone other than a Nissan GT-R certified dealer.
IANAL, but I don't think that clause is legal in the US. Any equipment originally covered by a warranty and still within the time/mileage limits of the warranty must still be covered unless Nissan can prove that the work done by an outside tech was the cause of failure.
They certainly try to enforce it via bureaucracy. My local Nissan dealer wouldn't even do an oil change on mine because they're not a GT-R certified dealer.
It's routine maintenance. My car is required to have its timing belt replaced by 100,000 miles. If the dealer does the work, the manufacturer provides a warranty on the parts. Since a broken belt could destroy the engine, this is a replacement that should be done and it's nice to have the warranty.
Direct sales were forbidden as a consumer protection back when dealerships were disconnected franchises with no licensing or direct relationship with the car manufacturers. To eliminate unscrupulous dealerships but protect the ones that were doing useful services the regulations made a compromise that eliminated direct sales.
It may be aggressive lobbying that keeps this status quo long past the original intent, but the original compromise came from a good place (eliminating "lemon dealers" and "lemon manufacturers" that refused to provide service/support/recalls).
>Carvana have proven these can be taken care of without a third party dealership.
Ah yes, Carvana, the company who has had its dealer license revoked in multiple States for a variety of violations, whose stock is down 90% (while insiders cashed out) and laid off thousands of people. What have they "proven"?
> educate the consumers, financing, DMV paperwork and most importantly service your vehicles.
I bought a new car direct and I was educated, my credit union was better than the manufacturer's financing offer, the manufacturer did DMV paperwork, and the manufacturer does service.
> For long stretches of time most manufacturers were offering 0% financing.
On a higher price. If you took a discount that could not be combined with the 0 percent financing, and financed using traditional financing options, you ended up paying less money.
I have yet to find to a situation where the overall direction of education flow was from the dealership salesperson to me.
That effect was significantly magnified when I was shopping for, and ultimately purchased, an EV. The only thing I can recall the salesperson knew more about that car than I did was where the dealership kept the keys.
Al these things are available at official manufacturer's shops in Europe, no need to go to private dealer.
And for some of those you're likely to get better rates if you shop around (car service, financing)
Official manufacturer’s shops in Europe are dealerships or are affiliated to a dealership. That’s literally what a dealership is.
The difference is that the customer experience seems to be radically different in Europe. I have no bad things to say about the dealership I had to deal with. They mostly sell at MSRP. They will gladly order you a customised model from their online platform if you need something specific and don’t mind the delay. You will have to negotiate the price if you want them to take back your old car but that’s mostly done in a very professional manner. Even buying used is generally quite pleasant. You will not get swindled at an official dealership. Meanwhile the US seems extremely cutthroat.
>You will not get swindled at an official dealership. Meanwhile the US seems extremely cutthroat.
This seems completely contrary to my experience. How on earth do you get swindled? Know the price of the car you want, refuse to pay more; you are the customer, they need to make a sale. Dealerships are abundant in most cities and compete hard with each other. There are always deals to be had.
Why do so many people here find this difficult? Salesmen are usually dying to sell you a car, and never want to see you walk out.
That's a luxury/high-tech car problem, not an EV problem. The problem is that currently, EVs only exist in that segment (excepting the Dacia spring, which is a basic car with a basic EV powertrain, but it's only available in certain markets)
The last two cars I bought the salesperson knew nothing about the cars. People can learn much more about cars by going to a web site than talking to a sales person.
- DMV Paperwork
Dealerships charge consumers for the privilege of submitting DMV paperwork. This could all be handled online. Don’t understand the benefit.
- service your vehicle
I go to independent mechanics. They service my vehicle just fine.
Dealerships have got to go. They’re a huge waste of time space and money. They reflect crony capitalism at its worst.
Dealerships have got to go. They’re a huge waste of time space and money
I see value in having a local showroom where prospective buyers can test-drive several models to evaluate their driving experience. I don't think I'd ever buy a car without being able to sit in it beforehand.
Imagine manufacturers buying out the dealership lots, turning a good portion of the lot to a small track for testing the cars handling, maneuvering, and acceleration without going onto public roads. I'm assuming a closed course will be much better for their insurance than going onto public roads and much more fun for customers since they'll (presumably) have straightaways and corners. And the fact that they could just keep a model car for each trim level for their line up might incentivize them to not be stingy on test drives (and when the car is past a certain point they sell it at a discount).
Another portion could be turned into electric charging stations using solar. With how many dealerships there are I think this is a neat use of the wasted lot space.
So all in all, you then would go check out the cars, order the car you want online, and then pick it up on arrival at the showroom, all while doing away with the haggling and downright scummy tactics dealers currently use. The fact they default to screwing unwitting customers over should be warning enough that there needs to be change.
Brilliant solution IMHO. It's located just outside Santa Fe which is very convenient. There's a huge number of Teslas in New Mexico that had all been bought out of state before they built this store. Now we have a place for local service for procedures that can't be done in the field.
Selling online without negotiated price is a big change. That should make the dealerships really uncomfortable in the long run… he's kind of saying "oh the dealerships could rent out Mustangs" but is that actually realistic?
Diplomacy is the art of saying “good dog” until you make it to the rock. Ford is learning what Tesla knew from the start: dealership interests aren’t aligned with EV manufacturers. There’s very little service revenue, and dealers are incentivized to add “market adjustments” to vehicles (which Ford dealers have been doing) creating a poor customer experience. Ford has existing dealerships and is going to have a heck of a time hacking around dealer franchise law compared to EV automakers who have no established dealer network. Someone on Twitter recently posted their Model S turning over 400,000km with only
$3k in maintenance costs. Imagine at scale what that does to dealership revenue when 5, 10, 15 million EVs are sold per year (which will happen in the next 5-10 years).
> "We only profit in one way: from new car sales and new car sales alone," Maron said. "We can't ... profit from services because our cars have far less parts than gas-powered cars. There's no regular service visits for engine tune-ups and oil changes. ... We don't make money off financing programs. We don't have insurance products or add-ons. A franchise dealer would look at this and scratch their heads. They would not know how to make money on this model."
> Maron says Tesla is fully committed to its mission of replacing all gas-powered cars with electric vehicles -- a mission auto dealers may not be eager to embrace.
> "We don't simply believe that electric vehicles represent a nice complement to gas-powered cars," Maron said. "We believe it's imperative they are replaced entirely by electric vehicles. ... It would be impossible for traditional dealers to convey this message adequately. This isn't a knock on them, but dealers are not fundamentally committed to the mission of EVs — we are. They make 99% of their revenue off of gas-powered cars. If you're opening a Yankees team store, are you going to ask a lifelong Red Sox fan to manage it?"
That is very impressive actually. Though your typo made me laugh out loud.
> Someone on Twitter recently posted their Model S turning over 400km with only $3k in maintenance costs.
400 kilometers and a $3k maintenance bill somewhat reflects the image of Tesla that you see a lot on the internet. Whether or not that is actually the case.
Unfortunately, manufacturers' interests are often not aligned with retail customers' interests.
For example, with Tesla, the company optimizes delivery numbers of cars sold by sacrificing quality control, and their service center model is anemic and almost an afterthought, especially when it comes to addressing the QC issues their customers experience.
For every Tesla with 400k miles on them with a few thousand dollars in maintenance costs, there are a dozen cars that are delivered to customers like this one[1] from today on r/TeslaLounge, with 17 blatant issues upon delivery that QC should have caught early on in the process. There are stories on that subreddit about customers having to wait months, without a loaner car, for service centers to fix their cars or to even get service centers on the phone about the status of their repairs and cars.
Dealerships act as an intermediary customer that can perform QC, repairs, customization, service, maintenance, reject deliveries etc that manufacturers choose to skimp out on.
Due to non-random sampling, anecdotes are not evidence when it comes to a phenomena at this scale. Even four randomly sampled entries are better than 100 posts of people complaining if the latter are more likely to appear in your feed than someone getting theirs with no issue.
You need an actually random sampling of delivered Teslas to determine how extensive QC issues are and whether the average one can go 400k km with only $3k servicing. Also, they defects reputed to vary substantially over time (e.g. one model year might have 5x the rate of two years later).
> the company optimizes delivery numbers of cars sold by sacrificing quality control
How do you know this? Did you see their internal data?
There are lots of anecdotes going around about Tesla's quality. However, with all the TeslaQ it is hard to believe that there is real correlation between anecdotes and data. Here are my anecdotes - I owned 6 Teslas over last several years. Not one of them had any QC issues. I had one service done because I hit tire debris and front break dust shield started making noises. Tesla fixed that for me quickly with no charge. As for the data - during earnings calls they mentioned that they do pay close attention to their customer experience data and they had period of time where service was lagging. But they started addressing this issue and saw improvements. The way they are growing I do believe they need to keep close eye on customer experience, but looks like they understand that themselves and use data to make sure they are on top of this. Unfortunately there's not much reliable independent data to have better understanding of this issue.
Add: The intent of my comment was to ask if parent info is based on specific data or just anecdotes. As an example, I gave my own anecdotes and mentioned that they are not reliable correlation to the data. Somehow the responses I've got are all about anecdotes, mine or others, also some personal judgement of my ability to appreciate cars or judgment of my life circumstances that required me to have these many Teslas. Can we get back to discussing the main point I'm making - do we have data to make any of these judgements?
??????? Why on earth would you need this many Teslas? Maybe if you are buying so many teslas then it makes sense why you don't need them serviced - you barely give them enough time to wear themselves out!
I don't think the poster buys a Tesla, drives it for a few months, and sends it to a junkyard. I'm pretty sure that just because the other person stops owning it, the Tesla does not stop being useful to SOMEbody.
Sorry there's just no way this is true. It doesn't even make sense. For this to be possible the loan payment would have to be less than the lease payment after depreciation. Even before depreciation this almost never happens without a huge down payment (which negates the point entirely).
Finance companies have a good idea of what a car will be worth after you are done with it. That is why they limit miles: they know the loss of value from miles and don't want to know lose money. Their goal is when the lease ends and you turn the car in the dealer pays the entire remaining balance and sells it as a used car. Dealers make more money from selling used cars than new (everyone knows what they pay for cars and won't allow any profit, but for used you don't know what they really paid for it).
When you trade in your car the dealer will give you an offer for your car. Depending on demand this may be higher or lower than what the lease company wants. When it is higher you win. When it is lower leasing would be better. Either way though, the dealer is pricing in a profit margin from selling your car, so if you don't trade in your car but sell it yourself you can get this profit margin in exchange for your time.
In the end it is about risk management. What will the car be worth in 3 years when you are ready for a new one? Nobody knows for sure 3 years in advance. Sometimes it will be worth a lot more than the lease company expects and so you win, sometimes it will be worth less and so you lose. If you don't trade your car in you probably will always win in monetary terms, though I'm not sure if it is worth the time.
How does sales tax fit in? If you buy the car, you have to pay sales tax on the whole thing right? I don't think that happens on a lease. And when you sell it, that buyer has to pay sales tax too right? And if that buyer is a dealer, then the next real customer has to pay sales tax again right? So sales tax reduces the liquidity and efficiency of selling cars, with no negative effect on leasing. This gets worse and worse the shorter the period of time. skolos owned 6 Teslas in several years, so this would be a big factor.
If you live in a state with no sales tax, then you avoid this problem.
Last two years used Tesla prices were higher than new ones. You need to wait up to a year to get new Tesla though. So you could actually make some money while driving newest versions of cars.
Maybe it's cheaper than leasing the latest and greatest, but not everyone has an unlimited pool of money all the time, and the assumption that this type of purchasing behavior is in any way typical or representative of anything is absurd and out of touch at best, and purposefully misleading for the benefit of Tesla at worst.
It looks like you knee-jerked pretty hard at that line, because they didn't say anything at all about their purchasing behavior being typical. They just said the QC was good on the cars they got.
And in general the issues I heard about were from-the-factory issues, so only having the cars for 1-2 years each wouldn't matter much.
Just because you don't notice issues don't mean there aren't issues. Tesla is widely regarded by "car people," both those who own them and those who don't, as having some of the worst fit and finish of any production car in the US. It's been that way since the Roadster. Here's a video review of the most expensive Tesla you can buy, by someone who rates cars professionally and rates it among the best he's ever driven, with paint flecks on the mirrors and other pretty egregious issues given the price point - https://www.youtube.com/watch?v=qen0ZlZM0ZA - and the video is less than a year old so it's unlikely given the long history of these and similar issues that they've made radical changes to their processes in the last 9 months or so.
Same in my experience, though it's not as extensive as yours.
It's surprising how often you see negative anecdotes about quality control amplified as representative of a larger trend. It often seems there is an agenda compelling many to work so hard circulating negative opinions.
I'm here to chime in on having very few QC issues on my model 3 despite having gotten it in 2018. Not sure where all the service nightmare stories come from, every time I have dealt with them they've fixed the issue.
yea i've had 2012 leaf for decade now, zero issues. i've had a tesla for over a year now, zero issues. From what i understand, if i do have an issue, i'll just have to push some buttons in the tesla app, and everything will be figured out for me.
I think a lot of the contrary voices are people scarred by ICE experiences and searching for comparable "gotcha boogeyman" to EV's to satisfy themselves with their current car situation, whatever it is.
Dealerships are rent seeking entities that exist purely due to laws that force consumers to deal with them and only them. They are not in either consumer or manufacturers interest.
If dealerships are so beloved by customers and so beneficial to them, why would they lobby so hard against customers doing business with manufacturers? They wouldn't need to if customers truly preferred them. Instead, Car salesman are despised even more than lawyers! Everything a dealer can do, a mechanic can do for cheaper. It's a ripoff and the law forces it to be a ripoff
Because customers don't know what value dealers provide. They think direct would be better because they only see the negatives of the current situation and not the positives.
Which is really true for pretty much everyone in this argument on both sides.
It's the lobbies that prop up the status quo because it has become very profitable, but it is easy to forget that the status quo exists in the first place as a series of compromises designed first and foremost for consumer protection against lemons.
I whole heartedly agreed on this point but have grown to see another side of the issue. I don’t want to over glamorize it but in the north east car dealers have done exceptionally well, and often were the wealthiest people in the towns they serviced. A dealership in Pennsylvania recounted to me how the founder of the dealership more or less built the town square and at one pointed owned more than half the town. Now this may seem negative but the founder is long dead and the dealership now employees a several dozen locals all making very strong salaries, all with minimal educational requirements (just a bachelors cause it’s in vogue).
Overall I guess the point I want to make is even thought it is rent seeking (many industries are) this one seems to provide for so many communities all across America. I find it hard to believe that ford will pass up the savings to the consumers. We all know that profits will be returned to shareholders.
This only convinces me dealerships should be gotten rid of. That's a lot of money sucked out of the car buying process. I'd rather pay less to a manufacturer than pay for a dealer to own a town in PA.
wow 17 borderline cosmetic opinions on a fully functional vehicle.
how dare they sell that vehicle.
Not to mention that when they bought it, Tesla gave the buyer the opportunity to reject it and have another specimen manufactured at no cost. they decided to keep it because it appears their vanity is literally only skin deep.
Those are issues that would be caught by any competent quality control process, and that particular example is just from the top of the r/TeslaLounge page from a few hours ago. At any point you can log into spaces for Tesla customers and find dozens of stories of just like that one, or worse, when it comes to quality control or service center service[1][2][3][4][5][6][7][8][9][10][11].
And you make a great point about the importance of rejecting deliveries, which is exactly what a dealership would have done upon inspection instead of forcing layman retail customers to do it free and to their detriment. We even have Tesla customers asking why other customers choose to take deliveries at the end of the fiscal quarter[12], because Tesla has a reputation of pushing out as many vehicles as they can in order to boost delivery numbers, even if that means delivering cars in poor condition. When quality and service is consistently that bad, you can't blame the customer for accepting a delivery of the car they spent tens to hundreds of thousands of dollars on.
Also, your comment goes against HN guidelines[13]:
> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
> Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
Is there really that much service revenue for modern ICE cars that isn't stuff BEV cars need too? Modern powertrains are pretty bulletproof, 10k oil changes and 30k air filters will get you to 100k miles. "Tune ups" aren't really a thing anymore either, especially in the first 100k.
Brakes? Maybe you're cutting out one or two pad slaps in that 100k.
Oil changes? Yeah, you've eliminated those, the lowest margin service dealers do.
Suspension components, air conditioning, etc? No difference, and that stuff shouldn't need to be touched in the first 100k anyway.
Tires? BEVs eat tires.
Still need wiper blades, cabin filters, etc. But those aren't big items either way.
I guess I just don't see where all this recurring service revenue comes from. Cars just don't break until they're 10-15 years old. Maybe some cars are really that unreliable still?
I own a fairly reliable ICE car from 2009 with ~100k miles, and I've had to get servicing for belts, water pump, brake pads, sway bars, oil changes, etc. I estimate I spent about $5k over the life the car on servicing.
That's excluding tires, wiper blades and air filter changes.
Owners of less reliable ICE cars probably spend more.
I've been using the vacation reasoning for a long time. I've just about convinced myself to get an EV and to rent an ICE for vacations. It keeps the mileage off my odometer that way, too.
> It doesn't sound that reliable if you've had to replace that much already with just 100k miles.
My observation is that it depends on the brand of the car. If it's a Toyota or Honda, or other well to do brand that people with credit scores reminiscent of FDA minimum cooking temperatures cannot afford it's the owner's fault that the timing belt snapped at exactly six miles more than the recommended change interval, they should have got it done proactively.
If it's a Nissan, GM or <clutches pearls> Chrysler then it's obviously the car's fault that it needs a fair number of suspension parts after spending 120k being fully sent over rural gravel roads with 300lb of tools in the trunk.
This pattern of double standards that absolves "things that should be nice" from blame when they fail to meet those expectations and blames more modest products even when their failures are reasonable can be seen across many classes of products, not just cars.
I think it’s worth noting that mileage doesn’t necessarily correspond to maintenance expenses. It’s only a rough rule of thumb.
People like to talk about mileage because it’s an easy-to-measure stand in for the age of a car based on its usage. But over time they forget that like in humans, there’s a lot of variation at the same age.
There’s other factors like road conditions, cost of parts, cost of labor in different parts of the country, unexpected events like fender benders, etc. that the mileage number doesn’t capture.
The same 100k mile car driven in a leafy suburb where not much goes on is going to be different from a car with the same mileage driven under harsher conditions.
> The same 100k mile car driven in a leafy suburb where not much goes on is going to be different from a car with the same mileage driven under harsher conditions.
Scotty Killer on YouTube said something slightly different. He said highway miles are almost one tenth of city miles. Or in other words, stop and go traffic is ten times as bad as constant driving without traffic. At least for the engine and the transmission I guess.
With a 300 mile range, I'd need at least 2 stops that are 4-6 hours, unless if I find a super rapid charger. That turns a sucky 12 hour day with 1-2 hours of stops into a 16 hour trip with probably 1-2 hours of additional stops still.
Ah, one of those. Typically most people are happy to stop for 30-45 minutes every 300 miles of driving.
The only people I know who only stop to refuel and then carry on until they've basically driven 12 hours straight are just trying to flex, it's some masculine thing.
More and more vehicles are getting 100-150kW charging, which definitely pushes a full charge more into the 25-40 minutes range for 80kWh EVs.
I wonder if having smaller cars would help as well, American cars/"trucks" always seem so pointlessly oversized. If the number of single occupant trips in London in things like Minis makes me sad, then I don't even want to think about single occupant trips in F150s in America.
Wow. You did a fantastic job at attempting to change my mind.
Are you seriously resorting to a manphobic ad hominem attack at someone's masculinity for simply pointing out stopping for 4-6 hours every 4-6 hours of driving obviously doubles trip time, and would require those who are trying to save money on flying, but not wanting to waste a half-week driving to the beach or a vacation spot is obviously because that person is on some sort of bench pressing flex thing?
Perhaps you forget the US is 40x bigger than Great Britain, so obviously what works for the majority of those in Britain (e.g. 300 miles) may not cleanly translate to other countries. I'm not telling you to not get an EV. It might work perfectly for you. But as of yet, all those advocating for it and blaming the problems of the world on ICEs still hasn't addressed the basic concerns many people still have about EVs.
Tell me your a condescending narcissist without telling me your a condescending narcissist again.
Lmao
>The only people I know
This is quite obviously an anecdote, never did I refer to you.
We can only draw comparisons from our own experiences and the majority of people I know do not drive such long distances, the ones I do know make a point of stressing the fact that they do not stop whenever I have gone on a long journey with them.
I haven't forgotten the relative size of the US, but the same applies to any country of relative size. I guess it begs the question of _why_ you all drive so far. Does land mass correlate to miles driven? Is it because of an emphasis of road infrastructure over public transport/rail? Hmmm
my car tells me to take it for service minimum once a year, for maintenance that's going to cost $500-$800 depending on the alternating schedule. 2-3 hours in the bay max. It's mostly visual, filters and fluids... material costs are small.
If there are problems, it'll be $170/hour plus parts...
A lot of people just do what the computer says and take it to the dealer. The workshop is always full... it has about 20 bays.
That's a lot of income for the dealership. If you drive a lot it'll be more than one a year...
I do as much maintenance as I can myself. If it's something I cannot manage (last year I had a split hose on the transmission radiator line) I take it to an independent shop.
They don't make their service revenue primarily from brand new cars, for the obvious reasons you've stated. It's when the timing chains, water pumps, head gaskets, piston rings, clutches, etc break, or the preventative maintenance to keep them from breaking (Audi timing chains, 10x $$$ if you don't replace them on schedule because of the interference engine), including the regular fluid flushes, battery replacements, air filters, etc. 80% margins on the little things add up :)
Using my experience with a ICE Chevrolet from 20k-120k miles basically nothing big happened before 100k, especially nothing that wouldn't happen in an EV. One set of tires replaced, front brakes, and a couple tire alignments. I did transmission fluid and spark plugs at 100k, and had a catalytic converter replaced and a coolant leak after 100k. None of that went to a dealership though.
I've bought 3 cars since 2008, I've spent $0 at the dealer on maintenance, they're all ICE... you shouldn't be going to the dealer unless it's warranty work. [well partly true, had a covered recall].
That said I had a dealer cuss me out for bringing them a quote from a mechanic for the same clutch replacement. "I can't f**ing cover my dealership like that" as if it was my problem. Same dealer who charged me $2k for a repair when they had the recall letter in their inbox.
Junkyards are an option for indy mechanics, unless insurance is being billed. I had a choice between maybe 3 months for a new part or next-day for a junkyard pull. Chose the junkyard pull, but I trust my mechanic to find control arms that aren't bent.
my car, my kids car, my wife's car, my motorcycle + bought near a bus route to work + pandemic. Son's car will go away sometime but it's around if I need a replacement car.
$3k in maintenance costs for 400,000km? I call bull shit. In Tesla tire sizes, you're looking at $1000 for a cheap ass set of tires. Certainly not gonna last 100,000 miles either.
Electric personal mobility devices are now more popular than mechanical bycicles and motorcycles.
Electric devices require significantly more servicing than mechanical ones. On the flip side, people seem content to treat electric devices like they're disposable and just buy a new one every year.
I don't think this dynamic won't hold for larger-sized EV's.
> dealership interests aren’t aligned with EV manufacturers. There’s very little service revenue
Citation needed. Both my EVs and ICEs needed similar amount of service. Breakage of drive trains are super rare nowadays (expect for over engineered performance stuff and just broken designs), same as breakages of batteries (cough, Bolt, cough).
All stuff my cars needed a service for in last 20 years were comfort features, gizmos, internal materials, electrical goblins, etc. Both ICEs and EVs.
Oil change is maintenance not service. But ok, let’s include that. It’s done at the same time as rotating tires, so it only adds few extra bucks of revenue for dealers (yes, you can rotate yourself/at other places, same as you can do oil change).
Transmission fluid for modern cars lasts about 100k miles. So you’ll do it maybe once, unlikely at your dealer as you won’t pay dealer tax for an old beater.
Exactly the same for timing belt and spark plugs.
Drive trains aren’t money makers for dealers for a long time.
Timing belt is the only expensive thing on that list (because of labor) and very few American market vehicles use timing belts anymore. The market has gone almost entirely to timing chains these days.
That's how it already works in Europe. Prices are set by the manufacturer and most cars are built to order. Dealerships rarely have their own branding, they basically work as franchises integrated with the manufacturer's network.
Their role is to collect orders, provide test rides and service the cars.
This might be right, but I'm not so sure. Public perception is that dealerships are adverse to customers because of information asymmetry + price haggling, and that online sales will hurt them -- but in many conversations with multiple different car industry insiders, they all say that dealers make almost no money car sales, and instead make almost all of it on financing, service and parts. That you can almost model the car dealing parts of a dealership as lead gen for the service desk / finance desk.
I don't know if that's right (anybody with more info care to comment?), but it's at least enough to give me pause on the "dealers will hate nonnegotiable pricing" claim.
You are missing used car sales. Most people who buy a new car trade in their old car and the dealer makes a killing on that. (when the car is leased that almost always amounts to a trade in from the dealer's perspective, though once in a while the lease company will sell the car in some way other than the dealer).
You are correct that there is no real money in new car sales anymore.
Commissions are 30-40% of an auto dealer's costs as a % of gross profit. If salespeople don't have to negotiate price, you can cut a lot of that cost and focus on higher margin (e.g., financing) and subscription products (e.g., parts & services) that deepen customer loyalty. The big groups will be better at making these investments (and the investments needed to sell/maintain EVs) and will continue to consolidate what remains a highly fragmented industry (i.e., the two largest dealer groups, AN and LAD were each only 1.75% of new car sales in 2021).
I wouldn't cry for nor count the dealers out just yet.
I mean, I'm all for the dealerships dying. They do nothing but waste peoples' time. We don't actually need them and the scripts that the salespeople and buyers effectively recite to each other like a Shakespeare play.
>>Target could have gone away, but they didn't. They bolted on an e-commerce platform and then they used their physical store to add groceries and return -- make returns really much easier than Amazon.
I know this is off-topic, but the easiest return I ever made was an amazon return. I went through the return process on amazon's website and was given a QR code which took a few mins. I drove to the nearest Kohls, walked to the amazon kiosk, showed the QR code to the employee, and handed over the return. Took all of 30 seconds in store.
Anyway, back on topic. A hybrid model makes sense for Ford to compete, and it is a lot like Best Buy/Target in many respects. However dealers have made a living for a long time being the middle-men, I wonder how they will deal with additional competition.
Best buy has a problem where people look at the product at the store then end up buying online, I could see people taking test drives and then ordering from the Ford website. Although I think the dealer will arrange commission if that happens.
Re: bestbuy “showrooming” issues, I think they actually figured out how to make it a value driver for them, whereas it killed others. It’s a great place to look at products, and they price match so you can walk out the door with the product instead of waiting.
> ... and they price match so you can walk out the door with the product instead of waiting.
I would love to see the behind-the-scenes numbers crunched on that model. I don't see how that model works long-term unless the percentage of customers in the showroom walking out the door with online price-matched goods is a relatively small group, or they're successful up- and cross-selling on gonzo margin goods and services before and after they walk out the door, or their COGS is way better, or some other activity to make up their bigger overheads versus an e-commerce marketplace.
Can anyone offer any insight how BestBuy is long-term sustainable with the online price matching policy?
I've known people who work at Best Buy and they get their products substantially cheaper, just as the online retailers do. There is some level of bake in for storing it at the store... but not really much different from sitting in an amazon warehouse for instance, most best buys have large warehouses in the back you'd never be aware of. Many people aren't aware of the price matching nor take advantage of it, they also sometimes will "confirm" the price match, so you can't really fake them out. And you end up browsing whilst they do the price match + grab the product from the back.
Long term sustainable simply because they've already baked it in and it's less widely known amongst the typical consumer and its honestly kind of a hassle, people pay for convenience.
Best Butt is basically a group of warehouses across the country - order from them online and you may find your order shipped from random Beat Buy stores.
And for many of their products they all sell at MSRP anyway (apple laptops say) so they’re already matching Amazon et Al. And things like hdmi cables are some off brand and so they don’t price match anyway.
They have a pretty slick setup going, also jumped in on the appliances market just as Sears et Al disappeared.
There is there real value. When you need it now they are just across town. You have to be very rural to not have one within half an hour. Amazon has 2 hour delivery in large cities, but only some cities (though granted the exceptions are small population).
I think it's more that Amazon's prices have come up on the type of stuff that's sold in stores where they aren't the price leader anymore, if they ever were.
I've bought more from Best Buy in the past few years than I have in the decade before because they are often the cheapest option, including Amazon. They also offer same-day courier service on some things I've ordered.
Another thing to consider beyond raw COGS is "attach rate": online price matching gets you in the door and buying the big ticket items, but once you are in the door how likely are you to also pick up accessories (especially if you are saving on the base item) or even unrelated things that you saw in the store while you were there?
Frankly I don't think you're very good at reading executives' words: you have to read through the lines and notice what they're not saying.
Nowhere in that does he say outright where dealers fit into an online, fixed price world. He only makes super vague statements like "dealers will be more specialized."
Reads to me like Jim isn't planning on dealers being around in the future but he's being vague enough to try not pissing the dealers off in the near-term.
My interpretation is informed by the knowledge that what he’s saying is not legal in most of the United States. It’s understood that dealers cut into Ford’s profit margin, but Ford is not at liberty to change the laws in numerous states.
Ford is however at the liberty to lobby for laws to change, and to simply stop selling (electric) vehicles where the laws don't allow for direct sales - like Tesla did.
Tesla has pretty convincingly demonstrated that it's possible to run a car company in the US without paying off the dealerships. It's only going to be easier for the second mover here to also stop.
I’m not familiar with laws pertaining to the dealership. Why can’t Ford sell EVs the same way Tesla do? In the same states. They still sell ICEs via the dealers after all. Nothing changes
I’ve not seen the actual text of such a law, but I suspect the lawyers have and are working on how to get around them (or force a net neutrality swell of support to remove them, perhaps at a federal level utilizing the commerce clause).
I honestly felt that this is where Sears dropped the ball. If any company should have had the "DNA" to compete with Amazon, it should have been Sears. Which basically owned the catalog/mail order space before the internet.
They could have leveraged their large stores to be showrooms / distribution hubs (that they mostly already owned, which is why the private equity people were so interested in them, due to their real estate holdings). You visit a sears, you see what you want, you order it and in a couple of days you come back to pick it up. Their logistics pricing should be cheaper than what amazon could have done (as they are skipping last mile), and for many consumers it wouldn't have made much of a difference (the sears that was local to me growing up was in the same general shopping center as the groccery store we generally went to, so we were regularly there).
Of course they did try to do "in store pickup", but this was when they were dying already and the experience was pretty terrible (i still used it a bunch back in the day as at one point they were basically paying us to shop at sears via the amount of free shop your way points they were giving out).
> You visit a sears, you see what you want, you order it and in a couple of days you come back to pick it up.
Why would anyone want that? If I’m going to go so much as 15 minutes out of my way, I expect to leave with the item in my hand that day. That’s the killer advantage for brick and mortar retail.
I don’t even want to go to the store the first time, but I sure as hell don’t want to go twice if Amazon offers the same overall latency with zero trips to the store.
Sears had the DNA and definitely were the Amazon of the previous century, but they didn't have the fight left in them. By the time Amazon showed up they were already being chewed apart by vultures for being fat, old, and complacent. There was already an LBO or three from private equity firms on their books and then the bad merger with K-Mart all with the intent of breaking Sears apart for pieces/scraps/brands anyway. Sears was already a walking corpse when Amazon came to fight.
I feel like the wilder "DNA fight" that wasn't was "80's Sears/Amazon wannabe": Service Merchandise. They tried to recreate the Sears formula for the late 1980s/early 1990s and basically convergently evolved the Ikea model before Ikea grew any US presence as just big warehouses with smaller showrooms up front. They made a bunch of silly mistakes in the 90s trying to grow beyond their roots in primarily the US South region to more national regard/footprint, but if they hadn't made those mistakes they probably could have been a real interesting contender against Amazon.
Sears made several attempts at online shopping over the years, none worked out. They finally gave up and it and catalog orders the year before the web took off. Hindsight is 20/20, but at the time it looked like one more attempt at online ordering would just be throwing good money after bad.
> This article takes an off-the-cuff comment from the CEO of Ford and reads too much into it IMO.
How does it ‘read too much into it’? He literally says they need to go to a 100% online order, no inventory, no negotiation sales model. That’s a HUGE a change from today.
I just think it’s an off-the-cuff comment and he probably didn’t mean it. He’s not announcing a new change in the way they do business. My read is that he’s generally saying he wants Ford to be more like Tesla. It’s not clear if any of his suggestions are even legal, given the laws in most states against direct sales (in some states there are special exemptions just for Tesla).
I don't think CEOs of public companies are allowed to say things that they don't mean, seems like the SEC would be up their butt about that that. His suggestions are perfectly legal if executed in a legal way, which they have started to do with Ford Blue split.
Nothing in that (at least the part you quote - I didn't read/hear the entire comment) says you can't have dealers.
John Deere (the company I work for) works this way: everything is just in time, if you want a new tractor you order it and get it 3-12 months later. You still have to order from a dealer. Dealers do not keep new tractors on the lot, except for demo units and service loaners.
I'm not sure how this will work for Ford though. Deere is selling to businesses, a new tractor is a financial decision talked over with the accountant, and are bought/traded in based on tax deductions (the date you place the order counts for ta purposes not the day you take delivery). Cars seem like more of an impulse purchase and so people want to go to the dealer and drive a new car off the lot. Dealers (and Ford) doesn't want to risk someone buying a car and then changing their mind, which is a lot more likely to happen if you don't have the car yet. Even for Deere, dealers normally keep new small tractors on the lot.
Dealerships should go away though. They’re corrupt institutions that prey on the uniformed. New cars can be bought configured from the factory and delivered to one’s door. The dealership then only serves as a way to service the vehicle.
For used car purchases that’s a different story I guess. Maybe dealerships only exist to service cars and sell used ones.
Even if this is the case, rather than direct-to-consumer, this would STILL be a tremendous improvement in the car sales model and I definitely look forward to it!
That's not in support of traditional dealerships, that's a direct attack on their business model while simultaneously taking advantage of them. Sounds like Ford wants to turn dealerships into physical retail stores, like a Walmart for cars, which I imagine no dealership is too fond about doing.
In my experience it’s usually the opposite and I have to ask for a price match to the online price.
It is their policy in the contiguous US to price match target.com to Target Store and Target Store to target.com. The policy doesn’t cover Target Store to other Target Store.
not target, but the “contiguous US” part reminded me of the time where at a Hawaii Walmart they refused to price match walmart.com. so I just ordered online right then and there and chose to pick up in the same store. I watched the same staff picking up the same item from the shelf and called me to the online pick up area…
I’ve had employees tell me to do exactly that because an online order counts as good toward the store’s metrics (or at least not bad) but a price match counts against them.
A lot has been said about the dealership model in the last few years, and the almost universal consensus is that it is an unnecessary and predatory industry and all auto makers should just sell cars directly like Tesla does.
That being said, is there any counterpoint to this view? Are there any benefits that dealerships offer today over direct sales? What would we lose if we got rid of every dealership? If there is truly little or no advantage, why has this obvious disruption never come up in the last ~100+ years of car sales in this country and all over the world?
>That being said, is there any counterpoint to this view? Are there any benefits that dealerships offer today over direct sales?
the only thing I can think to say is that they are still a convenient repair facility, Tesla is fairly notorious for slow turn-around for repair.[0]
I think a nice middle-ground would be the conversion of dealerships into showrooms/receiving-centers/repair facilities -- oust the sales portion and highly regulate the repair pricing. Faster repair times while getting rid of most of the scummy parts of the car dealership experience.
Agreed. I have nothing but bad experiences taking cars to the dealership for repair, and normally choose to avoid them for everything except for recalls. However, when buying an EV, I want to know that the manufacturer has repair facilities nearby since third-party EV mechanics are almost non-existent at this point.
If Ford is deliberately bypassing their dealerships for sales, then I would expect the repair service provided by dealerships to be even worse than normal, since they have no motivation to make you a repeat customer. And if not the dealership, where will I have the truck serviced?
I'm under the impression that the service part of the dealership _is_ the profitable part -- the car sales are more-or-less break-even after the monthly sales bonus incentives, which is why the dealer does the two-part "let me check with the guy in the back" and then "now that you've agreed to a price, you can talk to the guy in the back who will play 'good cop', explain things in plain english, and then try to upsell you on auto insurance, prepaid repair plans, and financing" to try to extract a little more profit out of a sale.
> I'm under the impression that the service part of the dealership _is_ the profitable part
If you drive a Ford, sure, it needs a lot of service. Which is why I stopped buying Ford. Toyota and Honda don’t need much service, and I don’t see how they are money makers for the dealer. And when you move to EV, you need even less service than before since the is no ICE to maintain.
I have a 19 year old Ford Focus that has been great. It's not much on creature comforts but it starts and runs like new. I've had two Hondas of the same vintage with dead transmissions.
It’s a shame those early 2000s automatic transmissions were junk. I’ve owned a few of them myself and it’s part of the territory. They got a lot better around 2012 but the damage was done.
> Toyota and Honda don’t need much service, and I don’t see how they are money makers for the dealer
Well first off, people like buy that marketing stuff hook line and sinker, so they make more on the sale. Second, pretty much any vehicle that rolls on earths surface is going to need stuff serviced in proportion to how close it is to the ground. For cars this means the dealer can make plenty of money selling brake pads, wheel bearings, suspension bushings, tie rods, and other wear items like that (and the labor to swap them out).
The thing about Toyota and Honda though is they create loyal customers who keep coming back. My buddy has a Toyota with 250k miles on it. And that’s considered normal wear and tear. Good luck trying to get a Ford past 120k. Ever had to deal with a Ford dealership? It’s like visiting hell for a day.
Pretty much everything made in the last 30yr lasts as long as you're willing to keep doing the normal scheduled maintenance and keep feeding it wear parts. The average Toyota buyer is a lot more willing and financially capable of doing that than the kind of person who rolls negative equity on an Altima into a Dodge Journey.
I used to be responsible for a fleet of delivery vans. I would have no qualms about buying Ford.
You’re talking about the difference between commercial and commuter use. We both know that they are not the same at all, and have different manufacturing environments, parts, builds, and specs. Clearly, this discussion is not about commercial vehicles.
Go look at the list of most reliable cars. Toyota and Honda are always listed as number one and two. Ford isn’t ever discussed as "reliable". I think this goes way beyond perception. Yes, commercial vehicles by Ford are probably reliable, but we are talking about regular commuter cars, and when it comes to that class, Toyota and Honda lead.
Wow, I was not expecting Ford transit vans to be above-average reliable, but a bit of searching around shows that indeed they are. Not as reliable as a Mercedes Sprinter, but I wonder if the operating costs are lower over the years (they cost roughly the same, which also surprised me) than the Mercedes.
I think that's just a reflection of how terrible the Euro-vans are in general. in North America they're not held in high regard by anyone other than the highfalutin taxi/airport shuttle/mobility van fleets that buy new and depreciate over the warranty period.
The Transit and the Sprinter (the latter of which has really gone down the tubes since it's '00s peak) might be "good" but that's like being MVP in a junior varsity game. Anyone operating them outside of warranty generally hates them compared to the Ford and Chevy vans they're replacing.
Sigh. This is why we can't have good things. Thank you for saving me some research time on the heads up of the overall Mercedes quality.
It gels with my experience with Mercedes sedans. Until I got to the very top of the line S-series like the 5xx/6xx, the owner experience on recent models was still a step down from what it was like leading up to 2000, mostly with fiddly bit details and robustness/conscientiousness overlooked in those details, and this quality corruption seems to have infected the other product offerings from your description. The core vehicle itself was fine, but I'm not paying the Mercedes premium just to overlook those details.
Maybe I'll stick with my original plan of getting a Toyota Hi-Lux and convert + tow what I want instead of lumping it into an all-in-one large commercial/trade van.
> I think that's just a reflection of how terrible the Euro-vans are in general. in North America they're not held in high regard by anyone other than the highfalutin taxi/airport shuttle/mobility van fleets that buy new and depreciate over the warranty period.
I’m sorry, but this statement is so utterly and totally opposed to the facts, that I’m beginning to think you’re doing PR for Ford. The demand for Euro-Vans in North America is so high, there’s a 1-2 year waiting list. It’s literally the most wanted vehicle in its class.
Oh FFS. Fine, if the fanboys demand it I'll do a personal use comparison.
What do you do in your Accord? You commute in it, or something along those lines, and that's probably about it. How much back seat wear is it getting? You got kids fighting back there? Do you stick your new dryer on the roof or do you pay the $20 for delivery? Your peers probably answer those questions about the same way. Meanwhile, several tax brackets down things are way different. Some single mom's four kids are doing their best impression of UFC in the back of her '09 CVT Altima, no wonder the seat is ripped, the floor contains a dozen types of dried soft drink syrup and the "window lock" switch is worn out by 100k. The differences only get wider as you start considering vehicles that are sold as having a lot of utility (wagons, SUVs, minivans), at the lower price tiers people size these vehicles to be just barely enough for what they want to do. At the high end people are buy way more vehicle than they need.
Let's even remove brand from the equation. How many grand Marquis do you see on the road these days? Probably 2 for every non-cop and non-ex-cop Crown Vic you see. Do you think that is in any way representative of the sales numbers when those things were rolling off the line back in the day? Of course not. Vics out-sold Grand Marquis and Town Cars by a wide margin. But a greater fraction of 'Vic buyers rode them hard and put them away wet with the intention of getting something else around 100-200k. The older, wealthier Grand Marquis buyers did the maintenance on schedule and kept them in good order so they lasted longer.
A key mechanism of "lasting longer" is price. People have different expectations and give different treatment to a car depending on price. So you trade in your Accord or whatever, it's in great shape. It goes on the used car lot for a lot of $$. So that ensures the the statistical next buyer is more well off, expecting it to last longer and therefore more willing to care for it. Meanwhile the guy that buys the Altima from the above example pays pennies for it and is expecting it to go maybe 50k before needing something big at which point he intends to dump it. So he's not gonna fix that window lock switch. He's gonna have no qualms about letting his dog f-up the already torn back seat. He's also gonna skip the transmission fluid changes and air filter and generally neglect the car because there's no reason not to if you intend on dumping it in short order.
You can run the same comparison on '00s Impalas and the Buick equivalent (both generally regarded as supremely reliable cars). The Impalas got beat and thrown away. The Buicks are still around (proportionally).
You don't think Ford, or GM, or whoever, makes reliable models for the same reason you'd never consider buying a house anywhere other than a good school district. It's a self-reinforcing expectation foisted upon you by the kind of people you surround yourself with.
You just did it again, for a second time. All the benefits you describe in the specific models come from Canadian manufacturing, which gives it a higher reliability rating than its US produced counterparts.
> You don't think Ford, or GM, or whoever, makes reliable models for the same reason you'd never consider buying a house anywhere other than a good school district. It's a self-reinforcing expectation foisted upon you by the kind of people you surround yourself with.
Completely wrong and incorrect. I’ve owned and driven Ford. They were not reliable and one model I had was officially recalled 17 times, but had numerous outstanding issues that were never recalled for those problems. Toyota and Honda owners don’t have these kind of concerns.
I will freely admit that Canada makes more reliable Fords (and GM) than the US, and the reliability indices reflect that fact. Back in the day, I knew many people who would only buy Fords and GMs made in Canada for this reason.
Two sets of the bes plugs money can buy because that engine was the one with crazy thin threaded areas where the plugs go. Had the dealer techs do those. And I went to a rural dealer, had a great experience.
Water pump, installed by local shop.
I would still be driving that rig, but it had an internal engine component failure that costs more than the thing was worth, so I sold it to a family here for a couple hundred bucks. Husband does his own work, has small shop, can profit on the vehicle.
Was a great vehicle. I got it from a shady dealer who I out dealt for a purchase 3 percent over invoice, and zero back end contract adders. (Took 6 hours, but literally saved me just south of 15k)
I agree with you, all that said. The dealers near me are the worst! That is by far the more common experience.
I have family in the rural part of the State and the dealer there is awesome! Would recommend.
My Ford driving experiences do not agree with you. But, that is all our own experiences too.
One of my favorite Fords was an old 1980 Futura. Box car, 4 cylinder, 4 speed manual trans. That thing got crazy good mileage and was fun to drive. Wonderfully old school black with plaid interior, that old AM radio with center dash speaker, lol. I went 100k in that car. Got it for a song too. Ugly.
This is an irrelevant comment. The topic of the conversation taking place is the revenue distribution of dealerships, not the relative reliability of different car manufacturers.
Regardless of manufacturer among well-known cars in the U.S., the economics of a car dealership do not change from one to the next.
They have a long history of this, even when the "American" car is the same as the Asian car except for the name plate. The big brands often fill gaps in their lineup with a car from a smaller Asian company. Other than the name it is the same car built on the same assembly line. There cannot be a difference, yet Consumer reports will rate the American car lower.
I’ll second this from a privileged position. I own a late model Land Rover, and if I take it down to the dealer to solve something, they treat me very well and put me in a very nice lounge while I wait. It’s a first class experience. I don’t think I’d get as nice attention from a non-luxury dealer though.
I get that option from both my Lincoln dealer and my Audi dealer, even for scheduled services. And they both leave a loaner with me, not some Uber credits.
> I feel like any repair at the dealership costs at least 50% more than if you go to another establishment.
It’s entirely dependent on the market and region. Sometimes it is cheaper to go to the dealer depending on make and model. It also depends on where you live and the availability of mechanics and parts.
There’s also certain things that are cheaper at a dealership. My father is a mechanic and still brings his truck to the dealership for oil changes because they will change the oil for literally less than his shop can buy the oil for.
> Sometimes they’re even worth using for “normal” repairs because they will sometimes bill by the book even if the actual labor time is higher.
This is exactly correct. Which is why if you aren’t sure, compare prices with your preferred mechanic first. Where I am, the best independent mechanics and shops charge more than the dealer, for various reasons.
Every shop I’ve seen uses the book times for any standard job.
My experience is that independents are significantly cheaper on a like-for-like basis, are also more willing to do a workable partial or alternate repair, but have worse lounges and often no courtesy car. (So you’re getting something for the extra cost.)
Yeah, it’s worth knowing the details - some shops will charge book time if it’s in their favor but charge clock time if the repair is a pain - and with older cars that have dents and rust and such it can often be a pain.
The closer the person who does the work is to being the person who writes the bill the closer you get to clock time in my experience.
Many mechanics aren’t really directly employees of the shop, and often get paid based on work they get (some even have to “rent” the stall). It can be an interesting industry.
Sounds like Stockholm Syndrome - they made an unreliable car that you need to get serviced all the time, but hey - at least there's free soda and popcorn!
RS 5 owner (and a few As). Any time my Audi has been in the shop for more than 2 hours I'm offered or given a loaner. Or they pick up my car, at home, drop off a loaner, and then return mine.
Try that with Tesla. Hey, we can give you Uber credits. Hope they're usable in your area, and you didn't have too much to do.
Fair point, but if you check the subreddit there are lots of similar anecdotes and the general sentiment of the commenters is that it is a common issue. I understand it isn't empirical data, but I don't know that that data exists outside of Tesla and I wouldn't really trust any data coming from them.
There is virtually none. My brother and my best friend sold cars and jumps around. Now they are at a no haggle Toyota dealership that basically sells at MSRP. It is generally much better for everyone involved. Just make it like a Tesla experience, throw you the keys, if you want it here is the prices. Don't have to deal with BS anywhere.
The "dealership" model needs to be killed off. It's probably just a few dozen moguls that make money off of these dealerships and spend most of their money lobbying.
I think that’s far less true then you think it is.
I don’t love the dealer experience, but they distribute the wealth of the auto industry regionally instead of concentrating it in Dearborn or wherever. Local dealers are always sponsoring little league teams and paying property taxes on relatively valuable real estate in a way that Tesla never will.
I dunno, it’s hard to argue this if you take it as gospel that the economy is at its best when it’s finding efficiency at whatever cost. I don’t feel super strongly, but I do think there’s something to this.
Kind of reminds me of stories of folks who need support with Google account issues - sometimes things like that just slip through the cracks. Google might have processes for typical cases, but if a weird corner case arises, it can be impossible to get someone to make an exception to help you.
I wonder if things would go the same way with centralized sales and repair processes ... "hey my new car is having this weird issue" ... "sorry the algorithm says everything is within spec, go away", rather than potentially being able to contact multiple independent dealership service departments until someone is able to reproduce/fix your issue.
Well, and becuse they don't have a dealership in every city. You can get a ford serviced anywhere and they have a waiting room for you to wait if needed. Even in rural areas, a very small percentage of the country is not going to be close to a dealer.
if your driving a newer car, theyll handle warrenty work, recalls, service packages that your car came with.
Everyone is having parts Problems, it's the scaling that Tesla still needs to do.
Tesla's wait times are because every part that sits on a shelf for warranty/service/accident repairs is a part that can't go on a vehicle coming off the assembly line, and we all know that Tesla / Elon has a raging hard on for "deliveries, deliveries, deliveries".
"Because they're scaling up". They've been making vehicles for 14 years, how much more time do they get to realize they should have a parts network?
> Tesla's wait times are because every part that sits on a shelf for warranty/service/accident repairs is a part that can't go on a vehicle coming off the assembly line, and we all know that Tesla / Elon has a raging hard on for "deliveries, deliveries, deliveries".
The Soviet Union's automotive industry operated in this exact manner. It's why, when by some miracle you got your hands on a car, sourcing replacement parts was nigh-impossible.
> ... how much more time do they get to realize they should have a parts network?
Local profit? That is, in many towns, my understanding is that the local dealerships are relatively well off. Which implies that a bit more of the money is kept local to where the cars are being sold.
I'm guessing this is less true today than in years past.
In many small to medium size towns if you find the family who owns the local ($BRANDNAME) dealership they are often among the wealthiest people in the entire county.
edit: I can see from the two other comments here alongside mine that this is a common observation.
Cars are likely a family’s largest purchase behind real estate. If you are going to sell anything, then sell the most expensive item that EVERYONE buys.
First step, have several million dollars available to you. Usually in the region of $10M (which was the estimate for the NBA player Damian Lillard's Toyota dealership, by the time you find a property, build it out, initial inventory stock, etc., etc.)
Dunno, but I can tell you how my family started as I think it's really interesting.
Yugoslavia was just falling apart - the entire country went from planned limited production to open market. My family was importing cars from other countries as this started. The demand was so great, that when the truck with cars stopped on a parking lot at his home, people would come running putting their "reserved" stickers on cars. Everyday he did a trip out of the country and back. "Sold" all cars before he had a chance to step outside a truck.
This lasted for sometime, giving him enough bankroll to open car dealership. Not sure how exactly it happened, but few years later it became Ford dealership and still is.
It's only unreasonable if they are not providing value. Lots of us get into business exactly because we can provide value and simultaneously become wealthy. This is no sin.
If they provided value then states wouldn't have needed to enshrine their existence into law. I say let them compete with the manufacturer and see if "go to a showroom for a test drive, then click click click, buy, deliver to your home" wins Vs. "Spend an entire day haggling and avoiding all kinds of poor treatment/predatory practices."
People HATE dealerships. They make a very fun purchase a very unfun purchase.
People hate dealers, love getting a car today. Dealers do what they do because it works, and it is largely what the consumer seems to prefer. You don't think dealers would do online fixed-price sales for pre-orders if it worked? They would! And they will, if the market rewards that.
Very few people actually want to wait weeks or months for the car. HN doesn't believe that, because we're tilted towards Tesla fans who are inclined to be okay with this. Average Joe will put up with a few hours at the dealer to get their new ride today.
"Dealers do what they do because it works, and it is largely what the consumer seems to prefer."
Not likely due to consumer preference, as its a given that dealership and buying experience is often hated by the consumer. look at this thread, talk to friends,and search the internet. Sure its anecdotal but its appears to be pretty consistent across the board despite not being a scientific survey.
Heck even carmax created their business model around how the consumer hates the buying process and even though carmax often charges more in the $2.5K - $4K range than what you can negotiate elsewhere they are still around.
Its more that they (the dealership) has a very strong lobbying influence and have rigged the market in their favor where the consumer has to take it. Like making themselves a forced middleman.
kind of how comcast is often rated among its own customer at the top of the most hated company list year after year ,yet they stay in business.
Something can provide value and still be considered unreasonable profiteering.
Health care in the US comes to mind. Is it beneficial? Yes. Are the prices marked up beyond insanity through bad incentives and rent-seeking? Also, yes.
The manufacturer can set the invoice price at whatever they want already. Dealerships are only negotiating their piece of the pie, they aren't actually able to alter the core price of the vehicle. The market/competition determines what a manufacturer charges, the dealerships just obfuscate the exact figure.
So I agree with the other commentor, they exist to extract local money, to make a few locals rich, the manufacturer's piece of the pie is whatever they think they can charge either way. If you cut out dealerships you make prices less obscure and force manufacturers to compete more closely with one another, and also save the middleman rent-seeking.
Sorta. Most of the big names already make more with financing than they do from the car.
Cars are odd. Shipping is not cheap on them. And will never be cheap. If there is not some contractual obligation to ship inventory closer to consumers, I see little reason to think prices won't go up in a market that is dominated by direct sales.
I'm glad if I'm going to pay someone for not doing anything it's a local person so I can see how much my money is helping them at the country club I can't get into.
Why is "local profit" is assumed to be a positive thing? It seems to me that if we were to prove keeping money in certain places to be a benefit to society as a whole there would be much more effective and direct ways of making it happen
I think your mistake here is to look at dealers simply as sales outlets. Dealers would deny that. You sell a car once, but you work on it multiple times throughout its life. IMO the problem with comparing to other retail channels is that most things we buy aren't expensive enough to warrant the same level of upkeep as a $30,000 car.
Tesla has made fixed-price online sales work so far, but notice that they're scrambling to build the support network. They're re-creating most of the dealership model but bringing the ownership in-house. That's only good if their customer service is good, because now you don't really have any good alternatives.
> why has this obvious disruption never come up in the last ~100+ years of car sales in this country and all over the world?
This is important. We can try to point to laws, but the more likely answer is that the current model is the best we've invented yet. There have been attempts to change, and more often than not it's the consumers that reject it, not lawmakers.
Before recent markups because of parts shortages, dealers mostly made almost nothing on new cars. Even now I'd assume most of their money comes from service and used car sales.
Mostly true in terms of margins, at least if you consider finance and insurance separately from vehicle sales (as all dealerships do).
Nevertheless, new vehicle sales including F&I is a non-negligible factor in most dealerships' bottom line, and new vehicle sales can also be a significant driver of service volume (both organically and as a result of loyalty incentives).
You're also correct in assuming COVID has been good for new vehicle sales profitability.
Here are the per-segment breakdowns reported by the three largest dealership groups in the US, before and after COVID:
2019 Rv: 47.0% New, 35.0% Used, 13.0% S&P, 5.0% F&I and Other
2019 GP: 15.0% New, 10.0% Used, 44.0% S&P, 31.0% F&I and Other
2021 Rv: 41.3% New, 39.3% Used, 11.3% S&P, 8.1% F&I and Other
2021 GP: 24.1% New, 6.9% Used, 35.2% S&P, 33.8% F&I and Other
(Rv = revenue as percentage of total, GP = gross profit as percentage of total, New, Used, Fleet = vehicle sales, S&P = Service and Parts, F&I = Finance and Insurance)
(source: SEC filings)
N.B.: Gross profit may be a misleading figure in this comparison, as it excludes major expenses (notably, salaries and commissions for non-administrative staff) directly attributable to particular business segments. Alas, I'm lazy, and these are the only per-segment percentages immediately available in all dealership 10-Ks.
With all that said, I imagine many, possibly most, dealerships would remain comfortably profitable even if net (non-F&I!) profit on new vehicle sales were zero.
Finally, note that fixed vehicle pricing is not exactly a new idea: GM famously introduced the Saturn marque with a similar tactic. And as with this older example, I assume Ford isn't planning to mandate fixed pricing on financing, insurance, trade-in allowances, third-party extended warranties, dealership-installed options, or anything else beyond the selling price of the vehicle itself and possibly certain minor fees related to the sale.
The only argument for it I've read is that it indirectly forces auto manufacturers to have local service centers to handle repairs, warranty work, etc.
>
That being said, is there any counterpoint to this view?
1. A national dealership network is at minimum, a soft-guarantee that your car can be maintained/recalled/fixed without you jumping through hoops.
Unfortunately, that soft-guarantee is saddled with all the other baggage of car dealerships. Pushy sales-people, extended warranties, predatory loans, etc.
2. It forces you to buy local, so not all the money flows out of your community, and into Detroit - some of it stays to circulate in your town.
3. People want to sell/trade their cars in, and Craigslist can be a pain in the ass.
4. People like to test-drive cars. People really like to test-drive used cars. See point #3. By the time Tesla starts holding used car inventories[1], and lets local buyers test-drive them[2], their 'showroom' starts looking less like an innovation, and more like a non-franchised dealership, where instead of the franchise owner skimming profit off the top, it just goes up the food chain, directly to corporate.
> 2. It forces you to buy local, so not all the money flows out of your community, and into Detroit - some of it stays to circulate in your town.
I think this is a kind of ‘broken window’ fallacy - ie unless there is a genuine service being offered then it’s kind of like requiring gardeners to use toe-clippers (ie the local economy are paying extra to hire people to do basically nothing).
> 3. People want to sell/trade their cars in, and Craigslist can be a pain in the ass.
Tesla offers a trade-in program so that appears to be similar in some respects?
> I think this is a kind of ‘broken window’ fallacy - ie unless there is a genuine service being offered then it’s kind of like requiring gardeners to use toe-clippers (ie the local economy are paying extra to hire people to do basically nothing).
I'm not going to argue with you as to whether or not the theory behind it is correct (my feelings on the subject are complicated), but I will point out that there's a major political movement in this country to 'keep it local', that has varying degrees of support in varying levels of government. Regardless of whether or not this desire is correct, whether its organic, or whether its simply manufactured through propaganda - it's present, and it gets acted upon.
> Tesla offers a trade-in program so that appears to be similar in some respects?
Which I address in point #4 - at the point where they start doing a major amount of business in trade-ins, they start looking like... A corporate-owned dealership, as opposed to a franchised one. A lot of the cost savings of 'show room-only' stores go away when you start having to deal with used inventory, scheduling test-drives, fixing cars in your dealership garage, etc.
Obviously, when they were first getting started, their used market was tiny, and none of those business needs/costs were present. But as their cars age/if they ever manage to successfully sell more models/if they somehow manage to capture a major chunk of the overall auto market, their 'stores' will have to offer pretty much every service that a traditional dealership does.
That’s a consequence of suburbanization and divestiture from the major auto cities (Detroit, Pontiac, etc) in Michigan.
In recent years there has been meaningful investment and growth in Detroit [0], but a lot of auto money is in surrounding areas like Grosse Pointe [2] and Oakland county [1].
I live in Detroit. We have tech positions and several employers that are doing fine. If you haven’t checked out the city in a while, I’d encourage you to. It’s really starting to rebound.
When I see "No Haggle, Fixed-Price, Online Only", I think "Rip Off", and I can't be the only one.
It's not that I enjoy haggling with car salesmen, walking out the door and getting hunted down in the parking lot like an animal... I don't... in fact I hate it. But at the end of the day I get a deal I'm satisfied and comfortable with - and it's always below MSRP - far below.
I think what we're seeing here is a combination of the younger generation's fear of conflict (a negotiation is an adversarial conflict), coupled with car manufacturers realizing a lot of people are totally OK paying $10,000+ over MSRP... almost "bidding" for a car.
I fully expect prices to increase, while overhead decreases (no sales staff, no stale inventory, no loss of inventory, rent payments, etc). But the younger generation will feel great because they got to click a button and a grossly overpriced car shows up the next day - just like "Amazon but for Cars!".
I can't see any positive coming out of this. You don't buy anything over a few thousand bucks without negotiating. Even the photo copier at your office was negotiated for days or weeks... how can someone buy a $50,000 vehicle at MSRP/Invoice price and claim they didn't throw away money?
It used to be only suckers walked into a dealership and paid sticker price... bigger suckers payed more than sticker price (gotta have that undercarriage coating), and everyone else paid closer to the true price having researched what similar vehicles sold for etc.
You would only feel ripped off because some dealerships say "No Haggle" and some do haggle. If every dealership has the same price for a specific car then literally by definition you cannot get ripped off.
You're also fixating too much on the meaning of MSRP. Before the car shortage MSRP was basically just a marketing number to anchor negotiations at a high number (except for cars in super high demand). Some automakers were notorious for deeply discounting below MSRP and some didn't discount much.
Dealerships compete to win your business. They compete in varying ways, which include price and service.
Who does Ford compete with if they set all of the prices and offer direct sales for an entire product line (EV's in this case)?
The answer is "nobody". And we all know competition is what benefits the consumer... this is a regression, not an advancement.
The dealership model can use a shake-up - nobody will argue otherwise. But the answer isn't to destroy competition and allow manufactures to set whatever price they want. That benefits literally nobody except Ford.
If Ford sells a car at $20000 to a dealership, no way they sell it to you below $20000 given they even have additional costs due to the inefficiencies of being a middleman, rent, transportation, manual staff, insurance, etc
Just like Ford can give the purchaser rebates, they can give the dealer rebates or holdbacks or various other payments when the car is sold (or if enough of certain types of cars are sold) or payments while the car is unsold; just because Ford sold the car for $20,000 doesn't mean the dealer gave them net $20,000 for it.
By your logic Ford can just jack up the price they charge to dealers and the dealers would have no choice but to accept it. But that's not true because Ford has to compete with other automakers.
You're basically arguing that Ford has a semi-monopoly over the car categories they compete in. Which is pretty laughable.
Again, by your logic Ford can just jack up the price they charge to dealers and the dealers would have no choice but to accept it. But that's not true because Ford has to compete with other automakers.
Why would a fixed, online price end up being higher on average than what someone paid after haggling at a dealership. If anything, it should be lower because of (1) Reduced overhead, and (2) It is more closer to a free-market due to more transparency.
Yes, there might be outliers where an extremely good haggler paid less, but that would be outweighed by a novice who paid way more, and the average has to be higher because of the higher overhead.
Why would Ford (or any manufacturer) offer cars on their website for cheaper than MSRP? What is their incentive?
MSRP is a suggested retail price, which is based off the manufacturer's costs + what they believe is a reasonable margin for their vendor (dealership in this case).
Ford cutting out the middle man means they can offer cars at the same exact price (MSRP in this case), but not have all the expenses dealerships have... meaning massive profit for them.
There is literally no incentive for Ford to offer the cars for less money. Plenty of people have eagerly paid $10,000+ over MSRP already - indicating they could even raise prices if they desired.
Look at Carmax as an example. Their entire business is built around the "no haggle" model - and if you know anything about the cars you are looking at, you will not find any good deals there. Everything is overpriced - but they will tell you it's their "rock bottom price" and any defects or problems have already been factored in.
It's just a sales tactic. Plenty of folks walk into a Carmax believing they're getting the best possible price without any of the hassle... just like their commercials tell you.
What you are saying doesn't make sense UNLESS there is a monopoly. Let's say it costs Ford $10k to manufacture the car. Let's say their average profit per car is $2k, and the dealership gets $1k on average - which means that ON AVERAGE, the dealer sells each car for $13k. Some people might get a good deal for $10k, and some pay $16k. MSRP is likely set to $16k.
You are saying that in the fully online world, Ford would get away with the same MSRP of $16k. This is not possible as long as another competitor can produce the same car for $10k or less and charge say $12k for it. Why would any consumer go for Ford in this case?
I haven't used Carmax but that's different - their whole business is in flipping cars and they have to make enough profit to run their website on top of it. So I would assume it is always going ot be higher price than what you'd get from elsewhere.
Dude just wants to think that his haggling is putting them on top of all of us. When the CEO of Ford says he's spending 2k more than Tesla for delivery. We all lose, them included, but haggling makes them believe they're coming ahead.
They don’t realize the whole dealership setup is designed to make the haggler think he got a good deal. The industry is built around capturing people who think they’re pulling a fast one on the dealer.
Very true, but in recent times it has been much easier to try to pay a fair price. That is until covid hit where it became a sellers market. However it looks like we might have another 6more months before it switches back to a buyers market the way things are going.
For example when I want to buy a car:
I start at Carmax which I know its the highest price i can pay for the car. In history I have always been able to get a used car for 2.5K -4K cheaper elsewhere .
This is typically how it goes.
1. I determine which make,model, year car I want.
2. Determine what carmax has it listed for and make that the highest overpriced value for the car.
3. I send out emails and call dealers for similar cars ( millage,model,wear , etc) give them my price that is under 2.5K - 4K less than carmax.
4. they say sure come on in.
5. The games begin and the bs runs from the salesman script that tries to convince me that a manufactured car in the 100Ks is a custom one of a kind vehicle that I will never be able to buy again.
6. i Say here is my price and the good cop salesman than sends me to the back to the sales manager who says I will put him out of business if he sells me that vehicle for that price.
7. I say I understand then I walk out and he lets me walk out.
8. A few days or even a month later he calls me back says he can do the deal then send me back to the sales manager again.
9. the Sales manager than says oh sorry we cant do that price because its a cash offer or that I have to use his preferred loan provider. Or tries to convince me to take his loan provider anyways and then cancel it by paying cash or refinance it a week later.
10. I walk out again or I get the car. One case I had to walk out again until I got another call to come back. In most cases I only waste about an hour in the dealership all together talking to the salesguy and manager, since when the send me to the back to the sales manager I typically tell them I have 15 minutes to make it happen or you can call me back when you have all the information you need to make the decision.
So atleast today we have the no haggle places now to tell us what is the ripoff price for the car and not the dealership sponsored bs MSRP or the kelly blue book crap.
The crazy thing is that I actually want to buy the car from carmax because I do like the experience better, but its not worth paying 2.5K to 4K more for an equivalent car.
It certainly is true horror experience and why everyone hates the dealer BS experience.
However it was even more painful prior to the carmax of the worlds, where the consumer was in the complete dark about prices all together.
Atleast with the carmax and other fixed price dealers , you know what the worst possible deal is and can typically save 2.5K to 4K by going to a normal dealer. You just have to be willing to play the stupid games with them.
I've bought 4 cars from Carmax. (I have 3 kids.) I know I'm not getting the "best possible price." I don't care. I've bought cars from the standard dealership model, and I hate it so much, I'm willing to pay a non-negotiated, FAIR market value for a used car in order to avoid the sales-tactic bullshit and playing the haggling mini-game. I don't intend on ever buying a car from a NON-non-negotiable place again. The dealership model can die in a fire, thank you very much.
The incentive should be competition with other manufacturers who are also offering fixed pricing. More transparency will benefit consumers.
Haggling over prices does not benefit consumers, just like haggling over wages doesn’t benefit employees.
The Carmax approach is great; clearly people are willing to pay to avoid all the normal hassle. Maybe their prices aren’t the best “if you know anything about the cars” -- where does that secret knowledge come from? Wouldn’t it be good if there were multiple Carmaxes and they had to compete on price and service? As long as the real prices were listed on the web and were always the same for everyone.
Any intermediary is only going to add more to the price, not less. If an intermediary made prices cheaper for their customers than upstream, then they wouldn't be in business.
The incentive is clearly competition from other manufacturers. In a world of dealerships, competition is murky because you can't really know the final price of a car unless you play the haggle game with every dealership. But if every manufacturer had all the final prices online, you can easily evaluate what is the better deal.
I really don't understand the rip off feeling if the price is the price.
If I see a widget and the widget meets my needs and the widget fits my budget and I buy it, I don't care how much profit they're making. Why does it matter?
I think the act of feeling ripped off or having to make sure someone only makes a certain amount of profit is a path that leads to anxiety.
You haggle over most things that cost more than $50,000 because those things are unique and their value is subjective.
I don't haggle over the price of gasoline or milk. It's not because the price is low. It's because the identical product is available from a dozen local merchants and I know which is cheapest or which has the best lit parking lot or which has self-checkout. Price becomes so standard that merchants try to compete in other ways. And for those that do choose to compete on price, $0.05 difference on a $5 item is a big gap.
> When I see "No Haggle, Fixed-Price, Online Only", I think "Rip Off", and I can't be the only one.
Since I'll know a fair price of the vehicle before I run across that, I can determine if it is a "ripe off" or a fair market price, with far less hassle/wasted time. I'd always buy from a no haggle dealership if the price was competitive (and my last vehicle purchase was exactly that, it was +-$1K from normal price based on vehicle loan records).
The problem arises when there is no other reference price to compare to. By only offering 1st party sales, and only on their website - Ford sets the reference price. So there will be no comparisons available... and gradually cars will get more expensive because they can and people will pay it.
The other reference prices are the list prices of competing vehicles.
You also have it backwards. The current system of "MSRP as guideline" and you have to negotiate to find the real price makes it more difficult to compare prices between cars and automakers (unless you relish negotiating the prices of 4 competing cars simultaneously at 4 different dealers). The current system is set up precisely to not be price transparent.
The reference price is then their competition, and since prices are not obfuscated you can compare 1:1.
Just like now, but dealerships add a whole layer you have to figure out by determining likely "discounts" between different brand's dealerships.
If the manufacturer could charge more they'd already be doing so, the dealership doesn't actually dictate the prices, they get told the price and are expected to negotiate up then keep the difference.
You keep making the same comment where you pretend you don't know that Ford isn't the only car manufacturer so you can justify the existence of dealerships.
> the younger generation's fear of conflict (a negotiation is an adversarial conflict)
The younger generation doesn't necessarily fear conflict. Just look at how it's winning the conflict about conflict against the older generation.
They (we) want to reduce these kinds of negotiation because they give an economic advantage for entirely arbitrary reasons: someone getting a car cheaper because they negotiated harder or getting a better job offer because their trust fund allows them to walk away with ease does in no way benefit society. Whatever they save, someone else has to pay extra to make the system work for the dealerships.
Worse, the ability to negotiate is not some random variable. It's tied to aggressiveness and a sense of entitlement. It's a lifelong rebate for bullies that practiced that sort of thing by stealing younger kids' lunch money. And the only reason it has survived as long as it has is because that happens to be the demographic car salesmen also hail from.
Worst, it isn't even just about someone's ability to assert themselves: a salesman may well react entirely different to the same exact words and behavior based on criteria that would invoke laws against discrimination in other cases. I remember a number of stories of black homeowners being quoted 30 % when having their homes' resale value assessed. Don't remember seeing any tests for car sales, but I'd be surprised if it didn't replicate there: be a white broad-shouldered tall good-looking man and your lowballing makes you a strong opponent. Lack any of those criteria and it's considered an insult to the profession and you get the cold shoulder.
I don't feel like being subjected to hours of manipulation and predatory behavior. I surely know how to push back and deal with it, but it doesn't mean I want to.
Local taxis are often cheaper than Uber/Lyft now since they don't have surge pricing. But the downsides are much worse that people will still pay a premium to not deal with it.
In reality, just like you no longer get a discount for buying online (remember "it's cheaper since the company doesn't have to pay for a brick & mortar store!"?) I wouldn't expect Ford & others to pass the savings along for long. But I'm okay with that given the upsides of saving me time and some mental abuse.
If you believe in competition then the logical consequence will be that the no haggle MSRP will be much more competitive than the current (well pre-COVID supply chain horror) MSRP with 5% padding built in because everyone likes to haggle and think that they are getting a good deal.
I don't follow this logic. The article says Ford is going 100% online for these cars, meaning there will be no other reference price available. Ford can charge whatever they want, so long as some people are willing to pay it - and during COVID we've seen people more than willing to way overpay on cars.
There is no competition with Ford's direct sales website. None.
That’s the missing link. They’re assuming that the person has to get the F150 - but they could buy something else, but nothing, wait for a cyber truck - many other options.
I enjoy a car haggle every now and then, but what makes it so fun is that its one of the few places you can haggle.
Try to haggle down the price of a bean burrito at taco bell and see how much fun that is. There are all kinds of bean burritos to choose from in mi barrio, but they aren't budging to make a deal.
The same people haggling for cars are paying over asking on house bids.
I've haggled at a guitar center, but then I can't do the same thing at a hot topic when I pick up my chain jeans.
It's a weird game, but more bragging than haggling. The sense of satisfaction at having bargained it down is a pretty good rationalization after you've purchased.
The real value of haggling is realizing some externality that you can take advantage of - a hail damaged car, a untuned guitar, something that would cost them to deal with and you can take off their hands.
In theory, if manufacturers charge an inflated MSRP, a competitor who doesn't will get the sale instead.
In practice ... well, maybe everyone makes more money if no-one undercuts each other too much. Is it collusion/price-fixing/anti-competitive? Or is it just good business?
You're negotiating by going to the other car makers website. It's actually much easier to find a good deal since it's much easier to discover prices compared to dealers.
Last car I bought, a Subaru Forrester, which is like 25% of cars in Seattle, I knocked $4000, off of msrp by haggling from 28k to 24k, cross shopping across dealers and walking in with a set price I was willing to pay after finding the lowest dealer. Also going in during 2 manufacturer rebates (one cash, one charity match), and at the end of the quarter. 2018s were starting to show up, bought the 2017.
They got real triggered when I said "all you gotta do to put another name up on that trophy board is come down $500 more" (they were writing all of the sales on the window as they happened).
Brought a book to read while they went in to "talk to the manager".
While there is the option to compared to 'no haggle', I can sit there and waste an hour on their BS for $4k. I find it fun and interesting, and I don't buy cars when I have to only when I want to. Helps to have multiple backup transportation methods.
If I had bought a Prius Prime a few months back I could have gotten $1000 cash back from Toyota, plus a $4500 federal tax credit. Right off the bat I would have beat your haggle by $1500. What a haggler I would have been!
But seriously-- if we're comparing "no haggle" to "haggle" then it doesn't really make sense to include the manufacturer rebates in your total. You'd presumably get those even if dealerships didn't exist.
Fair... It was $800 cash back from subaru and a $200 charity match. however the dealer just tossed in the $200 for the match so they could make the sale and pump up their charity numbers. So $800 of that $4k was a thing you would have gotten anyway. So I only dropped the price $3200. Still a good hourly rate.
Yes. But that's like the Mitch Hedberg joke where he sees stacks of Sam's Cola at Sam's Club for 25 cents and suddenly in his mind he's become a soda salesman.
"Hi, would you like to buy a can of soda for 50 cents? It's warm, because this is a half-ass deal..."
Heh I was referring to the fact that used 2019 models with 40k miles on them currently will sell for MORE than MSRP for a brand new car, because the used one is on the lot and available, the new ones are 6 months out.
I don't think the counterpoint has changed since it was codified in the laws of US states: limit the power of large corporations and their influence over sovereign states. Our ancestors were rather circumspect about corporate power within the US and created mechanisms to insulate themselves from that power.
The emergence of multinational corporations has naturally produced a similar model at the nation-state level: the ability of a global private enterprise to operate in some nation frequently depends on the existence of a domestic component, often in the form of a subsidiary with an obligation to retain executive staff that are citizens subject to the laws of the host nation.
My experience with dealers has been good. They've arranged financing competently, dealt with recall work, honored warranties and supplied OEM quality parts when needed. Nothing as complex as a passenger vehicle and all that goes into realizing one is ever perfect, but the dealers I've dealt with have met all of the expectations I've had of them. I suspect that much of the enmity towards dealers arises from unreasonable expectations. That's a suspicion. This isn't: the same people bitching about dealers today will be bitching at least as much about manufacturers when the dealers are gone.
At some point in this discussion someone speculated that the delegation of EV service to dealers is not viable due to the nature of EVs; the manufacturer must be directly involved or Bad Things will happen. That may be true. I don't know. I do know that, short of some form of mortal danger, I can't imagine a better argument to avoid EVs than that; I will never, ever own a vehicle that can't be properly serviced without the manufacturer's direct involvement. That would be deeply stupid.
A huge percentage of people who bitch about dealers have never bought a new car from one - and the majority of those who do, continue to go to the same dealer thereafter.
The dealership model has never benefited the consumer financially. The majority of dealers view auto sales as one time transactions where their goal is squeeze money from the customer using morally dubious tactics if not outright lies. You have to place the dealership model in historical context. They were created in an era where the Detroit automakers monopolized the industry. And they created mostly shoddy cars. They created “choice” by rebadging one car and passing it off as another. There are good dealerships who want a relationship with the customer. But in my experience they usually end up selling to a larger dealership who only care about gouging the customer.
Plus with cars basically becoming high tech batteries on wheels with dozens of minicomputers. When an EV really breaks down, I doubt your local mechanic can do much about it. At the most, he can swap out one module with another (if he has it). More likely the only thing the dealer can do, is give you a loaner car while the manufacturer ships the modules and components you need. Ford and Tesla are probably better off giving you a loaner car directly and when the parts are available instruct you to go to the nearest repair facility or in the worst case, the technician will come to you.
>Are there any benefits that dealerships offer today over direct sales?
Competition. In a decent sized city you will get multiple dealers for the big names (Toyota, GM, Ford etc) and they will compete against each other. Because of this, you won't pay over MSRP, winter tires at cost, discounted warranties, free oil changes for life and they generally try really hard to keep your business through good customer service.
Wow is that not my experience. Even for cars that I liked, the dealerships never impressed. I always ended up going to other mechanics. I also have discussed the issue with several friends in the past, and heard way more bad experiences than good ones.
Dealerships are major job providers in small towns and provide some of the better jobs. Salespeople, loan officers, etc.
Think replacing local grocery stores with Walmart. Low end jobs stay, high end jobs go away. Further hurts small towns.
My guess is that a good chunk of the efficiencies from this model will go to Ford corporate so it’s a wealth transfer from small towns to big co managers / stockholders.
People who like negotiations generally think they're good at it.
Guess what? The dealer sells multiple cars per day. You don't know enough to be a good negotiator against them.
Same thing as venture capital vs company founders. Founders found a couple of companies which do a couple of rounds each. VCs make way more investments.
I don't think I'm a good negotiator, I just think I'm better at it than you who is dealing with a "no-haggle" dealer.
You don't have to be faster than the bear, just faster than the slowest person to come out better.
When I buy cars I shop around, there's surprising variance in dealers depending on what's going on with them. If a no haggle place has the best price I'll buy that. I haven't had that ever be the case as they quote MSRP.
> Guess what? The dealer sells multiple cars per day. You don't know enough to be a good negotiator against them.
Right - so let's get rid of negotiations all together and everyone pays whatever absurd price the sales team at Ford can think of without laughing out loud.
This isn't a box of cookies folks... besides your house, it's likely the most expensive thing you'll ever buy.
There is no "one" price for the asset... unless we remove all the competition that drives down prices (dealerships) and put all the assets into a single basket owned by one of a small handful of manufacturers in the world. What could go wrong?
The problem is Ford will be the market. They are only offering these EV's direct from their website. There will be no dealerships to compete with on price and service.
> This is Hacker News, and I've spent 10s of millions on servers, colo, and cloud.
I have no idea what you mean with that Ford comment. My best guess is that you think consumers are too stupid to consider anything but a Ford?
I did negotiate server/colo/cloud prices, but I spent person-months of effort deconstructing what the right price was. I've never done that for a car.
I once interviewed for a CTO job at a major storage vendor, and in the discussion they said that most of their major customers successfully reverse-engineered prices, and that kept their margins down. I've heard that (over beers) from some server resellers, too.
These major storage vendors only make the software; the hardware is commodity.
The customers figured out the prices of the hardware: disks or flash, a way to connect them to a "server", the "server", the network that the "server" offers.
A decent service and warranty experience is the point a lot of people make, and this has obviously become less important with EVs which require less ongoing maintenance.
Beyond that dealers provide distributed and localized inventory management. Modern car plants basically have to run at full capacity year round, but sales are much more seasonal and unpredictable given effects of gas prices and other economic factors, many of which can be regional. The dealers find underused land all over the country and have huge lots that allow for cars to be delivered on a consistent year round basis which provides efficiencies in the logistics operations since the trucking, shipping, and rail contracts can have permanent workforces and long term predictable contracts. When inventories pile up for specific models the manufacturer can provide incentives and dealers can innovate and adapt to take advantage of these using local knowledge of the conditions in their community in a way that manufacturers would have a harder time doing. Dealers can finance their floorplan using independent and local sources of capital for inventory and buildings which allows the manufacturers to extend operations without taking on additional debt, or putting their own finances at risk.
Some of these factors played more of a role in the past, when new car companies were building out their dealership networks and benefitted more from offloading risks to dealer partners. Tesla was able to innovate with their small showrooms in malls largely because they went for a long time with only a small handful of models, and because the buzz around the brand and vision meant that there has always been a waiting line (still the case), so they’ve never tried to compete for the “car broke down, need something new this week” market, which has had no choice but to head to well-inventoried lot.
Well, for a customer, I think you want the luxury to try before you buy, easy returns, fast delivery, easy upkeep and repair, good warranty and finally you want the lowest prices.
Dealerships are very good for "try before you buy", "easy returns", "fast delivery", and "easy upkeep and repair".
They don't change anything for warranty, and they don't necessarily provide the biggest selection.
So I think best price is the only dimension that dealers could be worse at, but at the same time, you can often negotiate paying below MSRP with a dealer. I guess we're assuming most of the time they take a premium, but it's hard to predict what the prices would be if dealers didn't exist, would they be lower? By how much? Maybe they'd be higher?
The only thing about online orders that is pretty sure is convenience, you can buy a car in your bed and pyjamas, no need to talk to anyone, browse online and purchase, car arrives at your door.
Back in 2001 GM hired my university professor to study what could be done with the dealer network. Even then it was clear dealers were of no use in the long run, but there were no practical ways of getting rid of them.
Forcing dealers to do repairs only effectively meant risking that best dealers would switch to other brands, other dealers would have to charge more for the service and these two factors could potentially kill any brand. No single manufacturer could pull it off, and even if they could find a way to work together to change legislation, it would be way too costly and way too risky.
I am not sure what Tesla does, but I think there's a value in having somebody local which can show me the car, give explanations, provide maintenance services and add-on sales, etc. It doesn't have to be independently owned, in theory, but in practice I think it'd be hard for one company to manage so many local shops at US scale. Some kind of franchise model would work much better. Does it have to be the same as dealership today? Maybe not. But I think there's value in having something like that, even if not exactly what we have now.
The main benefit is it allows some absurd accounting gimmicks that paper pushers have optimized over decades. It’s also a jobs program for all sorts of useless middlemen.
1. Service centers. Others comments have talked about this.
2. Trade-ins. Most new car dealers also sell used cars (in fact many make more profit on used cars than with new cars). Because of this they can usually give you much better trade-in valuations than Tesla, which I believe just sends cars to auction. Obviously you could also just sell to CarMax/Carvana/etc. or sometimes sell a car to a dealership without buying a car. But this is an added bit of hassle.
This recent video on motorcycle dealerships argues that dealerships are beneficial for the financial arms of manufacturers and also manage risk due to warranty/recall work and sales flops.
There really isn't one. The laws about manufactures not owning dealers are left over from a very different era, and the existing model is a product of pure rent-seeking from the very powerful dealership lobby.
> Are there any benefits that dealerships offer today over direct sales?
Proximity and diversity. How are you going to have direct sales depots in every random town in the world? And which towns get which brands? Makes no sense.
While that is certainly admirable, if you’re choosing between half a dozen options, it would be difficult for most people to buy them all and return the ones they don’t want after testing.
Yeah but you'd have to set each one up separately, or buy/return in serial order (unless you have a great deal of capital). This vs. walking into some auto mall with like 5 dealers on the same day.
It has meant no test drives in practice. I was shocked when I tried to test drive a Ford Mach-E that no dealership within a 100 mile radius had any inventory on hand -- when I called individual dealerships to ask, they said not only was the entire inventory already promised to individual customers and the only way you could test drive was if someone bailed on their order. I got a few emails that inventory had popped up, by the time I called (even within a few hours!) the vehicle had already sold. I'm genuinely shocked that consumers are buying first production run vehicles entirely online without a test drive.
Even with dealer car sales there's usually a 48 hour or so grace period where if you realize you made a mistake, etc. they'll take it back and annul the sale. I imagine for a purely online sale there'd be a similar agreement and they just pick the car back up.
The way I've heard it explained before, feel free to correct me if my facts are wrong: State sales taxes.
The big 3 auto makers are all located in Michigan, USA. If they sold a vehicle direct, the sales tax dollars goes to the State of Michigan. Which means all the other states are missing out on *significant* tax dollars.
To force each state to get tax dollars, local dealerships were established. That way tax dollars go to the state the vehicle is sold in, rather than the state the vehicle manufacturer is located in.
I'm curious if this has changed at all over the last 20 years with the rise of e-commerce. For example, when I order a product on Amazon, do I pay taxes on that product for where I live (where the product is "purchased"?), or where Amazon is headquartered?
> The big 3 auto makers are all located in Michigan, USA. If they sold a vehicle direct, the sales tax dollars goes to the State of Michigan. Which means all the other states are missing out on significant tax dollars.
Also, this is not how it ever worked. Sales tax was and is never owed to the state the business is operating from. That is why buying online resulted in being able to evade sales taxes for many years, until the above Supreme Court ruling.
I wrote evade above, because the other states were not technically missing out on tax dollars. All states with sales tax have a “use tax”, which is owed to the state for bringing in merchandise that you have paid less tax on than if you were to have bought it in the state (Florida might be the only state without use tax for online purchases).
However, pursuing people for use tax for small items is a costly endeavor so most people get away with it. But a car is easy, since it has to be registered, the state can easily demand the use tax before making it road legal, and they do (for example when you buy from a no sales tax state and then take your car to be registered in another state).
States already account for this. For example, in Massachusetts, if you purchase a vehicle in a different state, you are subject to a "use-tax" which is equal to the Commonwealth's sales-tax. Otherwise, car dealerships would be non-viable in MA – everyone would take a quick jaunt over to NH to buy their cars.
Seems similar to the franchise model. Local people in local markets find the opportunities and take on the risk while the cost of the arrangement is passed on to the consumer.
Easier to see multiple cars from multiple different manufacturers in person in one lot through an informed salesperson. Ford showrooms will not have Toyota cars.
One commonly said counterpoint is that having independent dealers means you get better warranty service. Here's how it works.
I had a Subaru, and Subaru had a problem for a decade+ that their head gaskets were tissue paper and frequently failed. So I had one free replacement mid-warranty.
I went in just after the warranty expired for a normal service and lo and behold, the head gasket was bad again. The dealer replaced it for free. What happened? They defrauded Subaru.
So sure, there's an advantage. Not only will a dealer happily be aggressive at any warranty repair, they'll even commit fraud doing it.
Dealers have almost wide latitude about submitting and getting paid for "good will" warranty claims, as long as they don't abuse it.
Sometimes manufactures will direct dealers to fix things that are long out of warranty when weird things happen (like in Seattle when that radio station sent out a bug that bricked the radios over RDS -- the manufacture directed the dealerships via a service memo to replace the radios and bill the manufacture).
Service is a decent part of most dealerships these days, and a good amount of that income is driven from warranty claims.
Often companies have leeway on warranties - when I did warranty work we had a five year warranty but could give a replacement up to six months “out of warranty” if needed.
for obscene and obscure issues, their overpriced repairs are great. E.g. something weird happened with just your model and you need just that right part/repair but your local repairsperson doesnt have the specialized knowledge
In my opinion, we lose a lot, some things practical and others societal. Practically first, when I’m in the market for a new vehicle, I’m not sure which I honestly want. I like being able to go to a dealership and find something that convinced me otherwise from what I came to originally look at it. In the most recent case, I was really wanting a truck and being able to see them in person, how I fit, etc, was what sold me over one make versus another. Second, how does a future where there’s X car dealerships with different sites that I can’t easily compare across makes sound? Now it’s much harder for the average consumer to find a new vehicle. This will lead to aggregators, which will initially not be allowed up front because the manufacturer wants the full cut, but they’ll eventually concede.
Now societal. Sure, car dealerships may be “predatory” (I argue against that, some may be but most I’ve dealt with are opposite of that because they want your business), but at the end of the day it allows for more people to have jobs and participate in the economy. At some point we, technologists, are going to remove everyone’s job from them and we’ll act surprised societal uprisings happen because there’s no jobs available to the average Joe. Now I’m not arguing against automation, but car dealerships employ millions across the country, I don’t think removing those jobs from our fellow citizens who may or may not be able to do much more than sell cars, to no fault of their own, just to make a few more dollars for the manufacturer at “ease of the consumer”.
Once again these are my opinions, I’d love to hear from people who think this could be a good model for selling vehicles and will take them into full consideration.
Just a note, If you want to go sit in a Tesla or test drive one, you can still do that despite a complete lack of dealerships. In my experience, a Tesla is the only showroom experience where there was 0 pressure, and no-one trying to get my info or photocopy my driver license just to see the inside of a car.
A lack of dealerships does not mean that there are no showrooms or test drives. There's nothing stopping Ford, BMW, Mercedes or whoever from putting in a showroom next to a Tesla showroom. In actuality it makes it easier since a showroom doesn't have to have inventory; you can put them in places where a normal car dealership couldn't exist (this is exactly what Tesla is doing). I saw a Genesis showroom in an airport once...
The thing is Tesla is a luxury car for rich people - upper middle class and above. This means you only need a limited number of show rooms - where most rich people live - and rich people are also pretty mobile, so they can come to you. Scaling the same for car with more broad appeal may be hard to manage for the company, and there's no incentive for the third party to do it if they can't sell. Honda sells 4x more cars than Tesla in the US, Toyota - 7-8x. Can this still be managed by showroom-only? I have my doubts.
The state I live in has 1 (one) Tesla shop. For the whole state. Do you think the other car makers would be able to work with one showroom per state?
I’m guessing EV sale in your state is minuscule compared to ICEs? Why do Tesla need more than one showroom if that one can handle all the sales in the state? Or maybe there are Tesla showrooms in adjacent states that are frequented by consumers from your state?
Also, not all Tesla sales happened after consumers visited their showrooms. Tesla itself planned to close most of their showrooms at some point [0], only to reverse it later. I’m sure they were confident their sales wouldn’t tank when making such decision. One dealer per state may be too few for Ford, how about five? or ten? Do you think Ford can’t afford five or ten showrooms?
Tesla doesn't need more showrooms. But somebody like Honda or Toyota couldn't do with the same one-showroom-per-state model. That's why I have three Honda dealerships and three Toyota dealerships within 30 minutes drive of me.
> Tesla itself planned to close (all) their showrooms at some point,
Maybe for Tesla it could work. For Toyota - they'd be insane to do something like that.
> Do you think Ford can’t afford five or ten showrooms?
They could afford, but that would cost them. And it probably won't be very efficient. For Tesla, whose buyers have little concern for price, and whose meme value is obvious, it may work. For Ford, which very much competes on price and utility with about a dozen other makers, I don't think such a move would be survivable. They could sell one special model this way, maybe, but making whole business - I'll believe it when I see it, done not for a niche rich people's car but by some mass-market vendor.
You don't even need showrooms to give test drives -- there are companies out there which will drop off a car to your house to do a test drive.
Tesla mostly does test drives out of showrooms, but there is this:
> Tesla occasionally hosts test drive events for those who don’t live near a showroom. You can check out our events page to find regional test drive tours near you.
at the end of the day it allows for more people to have jobs and participate in the economy.
It's not like selling a car is a super specialized skill. We're also at very low unemployment. The people who were selling cars can switch jobs. People switch jobs all the time. Losing a job generally doesn't prevent someone from participating in the economy.
Mechanics can open their own shop or work at a Pep Boys. Likewise, the underwriters can work elsewhere, probably even remotely.
At some point we, technologists, are going to remove everyone’s job from them and we’ll act surprised societal uprisings happen because there’s no jobs available to the average Joe.
This is a problem of late stage capitalism, not technologists or automation per se. A job is only mostly a requirement to have your needs met because our society says it is. It doesn't have to be that way.
Non-negotiable car sales aren't new, Saturn was famous for doing it in the 90s. Their whole deal was to try to target younger buyers that didn't like the typical haggling process. Toyota did the same thing with their Scion sub-brand for the same reasons too.
Yeah I bought both a Saturn in the 90’s and a Tesla in the 20’s, and while it was nice to not have to negotiate to not be screwed over I still had to spend way longer hanging out with dealer sales people. Being an engineer I hate talking to people. I much preferred my Tesla purchase experience.
That's not reasonable. The "negotiation" is literally built into the price, essentially both sides assume there will be as a nominal discount, and if there isn't one you're actually overpaying.
So telling people "just don't negotiate" is about as reasonable as telling people "just don't tip" in mandatory tipping situations, it is a nice concept but ignores the economic reality of people trapped in the messed up system.
I've purchased many homes and they're not great either but they're not as bad. First, I'm not required to go through a real estate agent by law. Real estate agents do a lot of work I'd rather not do in setting up the transaction. When it comes to purchasing a car the dealer doesn't do anything I couldn't trivially do myself.
Dealers are government corruption plain and simple. They offer next to nothing, sometimes scam us outright, but we are required to patronize them if we want a new vehicle.
Real estate agents on the other hand mostly just charge too much.
Based on what metric? I have a hard time looking at Tesla's sales, revenue, profit, production capacity growth and not thinking they will continue to be a leader in EVs far into the future.
There's no hatchback, mini, SUV, or truck models available yet... And it feels like Tesla is even further behind in these areas because they are not giving any roadmap details (that I've heard of), while other companies have offerings available now.
I hope Tesla can remain a market disruption and continue to push people to electric, but they currently are a one trick pony (which isn't a bad thing, it let them enter the space)... But as a one trick pony, I would agree they do not currently "look like THE future of EVs"
There are a couple of EV models with a particular battery manufacturer (LG) that were recalled for a fire problem. 72,000 cars for GM Bolt, the most popular one.
Tesla shipped that many cars in 2016, and is growing 50%/year.
Tesla can sell you a mid-size sedan or a CUV, ignoring the relatively small niche occupied by the S and X.
Ford competes directly with the Y, and also in an entirely new segment Tesla does not compete in -- the pickup.
Chevy has the pickup coming, and already competes in the affordable compact car segment (27K MSRP for a Bolt? That's getting into 'excellent value' territory) that Tesla does not compete in. GM also has the Hummer, which is blazing an entirely new trail.
Then you have VW, Kia, Polestar, etc. Tesla has a nice head start, and a good charging network, but rivals are catching up fast and will end up outpacing what Tesla can offer. The Model S is aging, with no apparent revamp in sight, and if the Model 3 follows that same pattern then Tesla is quickly going to look outdated while the competition is one-upping each other in new designs.
There's also a fair number of people who do care about reliability, don't want a touchscreen dashboard, don't care about fart gimmicks, and want windshield wipers that just work. AP is no better than the competition, and FSD is a gimmick that appeals to a very particular kind of buyer.
I enjoyed my P3D but have no expectation I will buy another.
Well, personally, based on Elon Musk's Twitter. Unless he is leaving the company very soon, he's going to take the company down with him.
From a more technical perspective, they're literally the only EV manufacturer selling cars in the US without a CCS connector. (With the minor exception of Nissan, who have already announced that the Leaf will switch from Chademo to CCS.)
And finally, from an "I actually own a Tesla" perspective. I would never buy another one. Not because of the car, which is fine, but because of the service experience. It's awful. It's so bad, I have trouble putting into words how terrible it is. I live in fear that something will go wrong with my Tesla again, because getting it fixed will be yet another nightmare.
I imagine the +$20k "market adjustment" markups on the F-150 lightning (and other EV's and hybrids) [0] by dealerships probably factored into this decision.
It 100% factored into my decision to cancel my pre-order for a Lightning. The dealer said to me via email in December 2021:
The latest communication is that order banks will open in January. Ford will be sending invitations to build / order in waves as to keep up with the demand. The invitations will be prioritized based on reservation time stamps. Your reservation is number 138 at our location. I have no way to track where you are in the total reservation list. Once 2022 model orders have been fulfilled, Ford will start the process over again. They expect to start taking orders for 2023 models about mid next year. Given the demand and number of reservation ahead of you, it is reasonable to think that you will not be able to order until mid 2022 for a 2023 model. I also need to mention that Managment has indicated there will be an addendum added to the MSRP. We are expecting that to be about $10,000 but could be a little lower or higher dependant on supply vs demand.
I called Ford corporate who didn't care. So I canceled my preorder and decided not to proceed with becoming a net new Ford customer so long as dealers are involved. This news gives me hope that model is not long for this world - thank goodness.
Count me as another "will buy an f-150 lightning if they will take my money but not if I have to go through a dealer". I don't know how many of us there are but I really hope enough that I never have to go to a dealer again.
I'm interested in a Mach-e......that was until I saw the markup the dealers wanted.
I'm done with dealers. I recently helped purchase a car for my father after his was totaled. I talked to dealer and he promised that they are selling at MSRP. Next morning I call him and he wants above MSRP unless I RESERVE NOW. I told him I'm no longer interested in doing business with him and went elsewhere.
Not to mention the TERRIBLE experience of being treated like a pocketbook by the salespeople. That also call, text, email and pester you incessantly once they have your details. Block them and they will leave a VM twice a day.
It's not entirely on the salespeople though. Their compensation structure and the nature of not respecting return customers, incentivizes this behavior
Those idiots did the same thing with the Focus RS. It was basically a hotrodded mass produced econobox but the dealerships treated it like a rare Lamborghini. I'm convinced it's why that car died so quickly: demand didn't match dealership greed so they just sat on the lot.
I was going to place a preorder deposit on launch day, but as soon as I had to select a dealership in the configuration process, I stopped and changed my mind. Also would have been net new to Ford.
It baffles me that dealerships are raising the prices of cars they already have. Supply shortages causing bidding of higher prices of parts is expected. But increasing prices of cars that manufacturers have already provided to dealerships at the same price, seems like price gouging initiated by the dealership and predicated by greed (and should potentially be illegal?)
This happened to me trying to buy a RAV-4 Prime 1 year ago (advertised a $40k car, they "adjusted" the price to $60k via a bait and switch). So you know what I did? I literally went online the day they told me about their adjustment, and reserved a Model Y.
My only concern is where all the scumbags are going to end up if car dealerships cease being a thing.
Ford doesn't do shit to dealerships. When you have a grievance with one, you realize how little control the manufacturer has (or is willing to exercise) over them.
If some dealership gets sanctioned by a manufacturer for being jagoffs, they'll put up a new sign next week and be a Toyota (or whatever) dealership. The manufacturer knows this and won't alienate them for one customer.
I bought a (Toyota) Scion xB when it first came to the States in 2004. The brand rollout was fixed-price, advertised as no-haggle. A big play for that era's Gen Z, Gen X. Focus was on personal customizations as upgrades, not much else rom the mono-spec model. I loved the whole concept. Dealerships hated it.
I loved that car, drove it until it the wheels fell off.
Point being, Tesla is hardly the first one to pull off this model.
As someone else mentioned, it wasn’t online. You still had to deal with dealership. Sometimes Scion showroom was right next to Toyota’s one, practically the same people.
Also, it no longer exists. Dealers don’t like it because they make less profit off Scion cars. The incentive wasn’t there. You can see how it is different than the direct model Tesla use, and Ford is contemplating to adopt
I am pretty sure that I did buy online-ish. I filled out a customization form on the Scion website (it was a fancy webpage for 2003/4, but bascially just a very basic form submission), and then got an email a few days later from the nearest dealership (at the time I had to drive a couple of states over to get it), and it went from there. But there was no negotiation. I walked in, signed papers, and drove out with a car. Pretty revolutionary for 2004.
And true Scion as a brand no longer exists, but it lasted pretty long.
In this case, Ford is not saying away with the dealerships - they're looking at them as distribution hubs, basically...like Scion.
The last new Ford I bought from a dealer was a 6 hour experience. I came ready and got my vehicle for 3 percent over invoice and avoided all the cost pack ins at contract.
It was brutal. And I used sales skills, as a buyer, learned from high octane types that get that money no matter what.
In the years following, people gladly paid me $1k, plus a percent of the savings off MSRP, to buy cars for them.
Did that a few times for a little extra spiff on my vehicle buy.
Was a Ford Expedition, 2000 era vehicle. Those are made on the F150 platform and are great outdoors rigs, though I won't ever get another one, nor a new vehicle from a dealer again.
Someone will make an EV Expedition type rig. Probably Ford will and I want it.
People paying non trivial money to avoid the dealers is exactly why Ford is doing what they are doing.
I'm surprised they see spending less on advertising as part of their EV strategy. Copying Tesla in that regard might not work out the way they want it to. IMO Non-Tesla EVs are already facing an uphill awareness battle.
I think you’re drastically underestimating how immensely popular the Ford F-150 is. Every single person who wants a truck knows about the F-150 and I’d wager the vast majority who may purchase an EV know about the F-150 Lightning or will find out as they start hitting the streets and they see them in parking lots and at stoplights.
Having 220v out the rear to say and looking like a normal truck will help a lot. There are a lot of contractors who buy a lot of trucks and not needing fuel or the trucks or generators(no longer needed0 is a huge win. Plus they check off every single checkbox for a truck, minus the perceieved distance anxiety.
Not disputing that these will sell really well, but you can get the same 220v out the tailgate of an ICE F-150 today, without waiting 2+ years for the privilege.
But what percentage of those F-150 owners know there is an EV version? Or put another way, how many of them can you convert to an EV version with effective advertising?
More demand now leads to more confident investment which leads to more actual growth in the end. Brand awareness advertising isn't only about orders today. It's about implanting the idea "Maybe I'll buy in EV in a couple of years when my truck wears out" in a consumer's head.
It's only when demand is completely out of hand, or when you don't want to Osborne yourself, that you want to stop advertising.
They probably would appreciate a boost in sales if advertising can attract new customers (non truck & non Ford people). Ford might be trying to copy Tesla's strategy with marketing. However, the two companies target different populations and I feel Ford would benefit from advertising.
That's a great point, but I haven't heard when that is going to happen. Until then, IMHO ads shouldn't be discounted by Ford (this of course assumes that Ford actually wants to convert people from ICE to EV).
The Lightning seems to be designed to convert F-150 buyers. It looks just like a regular F-150 and comes with features rural customers would love, like powering your house during blackouts and your tools away from an outlet.
It's not designed to convert existing F150 buyers.
It's designed to get the guy who has a Tesla and a Tacoma in his driveway and who sees fullsize domestic trucks as a penis extension for backwards hicks to trade both those in.
This isn't about converting existing owners. It's about growing the potential market.
This is definitely false ! I can't speak to the motivation of buyers but Ford commissioned a lot of consulting in advance of developing the Lightning and they are obsessed with trying to convert existing customers to become EV buyers.
I wouldn’t be surprised if over 50% were aware, but whether they’re strongly favorable enough to buy one at the moment is up in the air.
There are a lot of F150s though, and the Lightning’s design is distinct enough that it advertises itself even with a tiny fraction of owners actually converting.
Also, the ridiculous things people are going to try towing with that much torque will win some over as well.
Every single fleet sale in the country[0]. Tack on the transit electric and you’ve got enough work for the entire factory for years.
[0]obviously hyperbolic but fleet electric makes so much sense because many are already centrally parked and the rest can be trivially recharged at home much easier than dealing with gas.
The 2022 F-150 Lightning preorders filled up very quickly and far exceeded Ford's initial production plans. They will be supply limited for several years. Why spend a bunch of money on advertising when you already have more customers than product?
From what I've seen of the coverage, that doesn't quite seem true for the F150. It has decades of name recognition built up and lots of buzz going on for it already. The F150 may be the first real ICE>EV mega crossover thst happens.
The first electric fullsize pickup to market is going to be a f-ing goldmine.
There are a lot of people who commute in a sedan and have a Tacoma or Odyssey that gets driven when needed and would replace both with a fullsize crew cab truck if it weren't for a little voice in the back of their head telling them that such a vehicle does not project an image that is appropriate for the kind of person who lives in a million dollar home with solar on the roof in a neighborhood dotted with black lives matter signs.
An EV variant drops that stigma and will attract a bunch moneyed buyers who previously would never have considered a fullsize truck. That's huge.
F-150 is the second best selling vehicle in the WORLD. Not just the US. Think about that for a moment. Even if Ford simply replaces 1/2 of them with EV, that’s more than 15x what Tesla delivered in 2021.
There was an article here on HN about the Ford Lightning a few days ago, and now this one. I think their free marketing strategy must be working if it's even reaching the HN crowd, which is not really a traditional market for Ford pickups.
Astroturfing is an incredibly common advertising strategy these days. They're targeting silicon valley and the silicon valley wannabes. HN in a nutshell.
Well tesla has seemed to trying shooting themselves in the foot with their truck rollout. Naming it "cyber truck" then making it look like a bad hot wheels, giving it a small bed with angled sided making it badly shaped for carrying many loads (like a pickups bed is meant for), using new manufacturing technique for its body which results in problems that slow production, bragging about it being indestructible then breaking it window trying to demonstrate how indestructible it is.
I recently bought a Prius Prime and the amount of work I had to do to buy it at MSRP was ridiculous. If you have an oversubscribed car the dealer model just doesn’t work.
If car companies are going to compete in the future they will have to either eliminate dealers or at least force some type of structure to the sales process, otherwise people will gravitate to the companies that do (like Tesla).
Dumb questions: isn't this just the market at work though? Why is it actually a problem for car makers if the car is sold above MSRP?
Just a worse consumer experience that reflects poorly on the brand? Sony seems to deal with it with sold-out ps5 and resellers gauging.
I mean you're not the only one suggesting this is a problem. Ford clearly seems to have a problem with dealerships and their markup I guess (or I misread the article).
It’s a problem because the dealer keeps the markup.
The dealer isn’t doing any R&D or really much of value, as you can see they’re being replaced by a web site.
Who's to say Ford can't "markup" either? To me that's exactly what it is...non-negotiated. If the dealer can sell a Mach-E for $5k above MSRP, Ford is leaving money on the table. Ford can bump up their non-negotiated price just as much. Why not? What are you going to do, go to another dealership and negotiate?
It’s like any other system. A middle man has to take their cut and will increase costs. There is no reason (that I know of) to think the dealership model would ever decrease costs.
A middle man doesn't necessarily increase prices. If you want to letter a package from the east coast to the west coast, do you forgo the USPS stamp simply on principal they are the middle man and thus increases your cost?
I can think of a handful of questions that need to be answered besides just saying "middle man bad".
What's the cost of delivering dozens of vehicles from the plant to a dealership vs delivering one off vehicles to a house? Or the cost of an OEM having their own employees distributed to answer questions on a vehicle. GM has more than 4000 dealerships...would sales decrease because it would be less accessible to customers to see, test drive and service vehicles?
I don't believe the current dealership model of huge lots, tens of employees is efficient. But I'm not so certain an OEM handling everything themselves is optimal.
It would only matter if their MSRP prices were identical though, right? I don't buy new cars so I don't actually know. Is it common for competing brands like Chevrolet and Ford to price similar models at identical price? I always assumed thered be variations.
The last car I bought I showed up at the dealer with a certified check and it still took over three hours to complete the deal. I'm done with that business model.
You got off easy. Took me eight hours at the dealer spread out over two days, with an additional total commuting time of two hours, so ten hours to buy a car. And you thought that was it? Nope. Took them an additional six months to issue the completed registration. When they say the dealer sucks, it’s always an understatement.
I bought my Volvo C40 EV this way, though it wasn't exactly seamless and the overall price I ended up paying wasn't as clear as it could have been, though it was all discounts in the end.
I put in the order through Volvo online, and they confirmed the build sometime the middle of last year.
Volvo had an online order tracker, that shows progress from order acceptance to the car being in production, etc. But it was never actually updated. I was a little worried the car wasn't going to show up before my existing lease was up in June. So I contacted Volvo customer support in early March and they surprised me by telling me the car was going to be delivered to the dealer the next week. I had heard nothing from anyone in months, so that was a big surprise.
I called the dealer, who I'd never talked to until that point, and they confirmed the car was coming in the next week and setup an appointment to pick it up. Because used car prices are crazy they could also buy out my leased ICE Volvo and give me a bit of money back for it.
So the price I paid (another lease) ended up including the new C40 at MSRP, minus trade-in, minus CA EV credit, minus Federal EV credit, and minus a Volvo loyalty discount.
It wall worked out pretty well, but would have been nice if their order status page actually showed order status. I imagine it was a manual process to update it and somehow that wasn't getting done. I heard from other they had the same experience.
I absolutely hate dealerships. I tried to buy a Mazda 3 a few years ago and the dealer took my keys and driver's license with some stupid excuse. I didn't realize until later that it was a tactic to prevent me from walking out the door when I wanted.
I had a Jeep dealer in Kansas City do this to me,. Then refuse to give them back and literally stood in from of an exit to prevent me from leaving. I told them I was calling the cops. They gave them back.
> In the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers.
I have a lot of optimism for The Ford EV business. First they are making some great EVs and they aren’t to proud or set in their ways to realize the friction points for prospective EV buyers and owners.
If they keep making the right moves, and improving the whole Ford EV experience, I might be inclined to purchase a Ford EV next time instead of another Tesla.
The bicycle industry is rapidly moving to factory stores. The big brands are buying out their more-successful dealers and turning them into branded stores, locking out any other brands that the dealer sold in the process. For example, Specialized will buy a store from a retiring dealer, get rid of the Cannondale inventory, and re-brand it as "Specialized Bikes". This strengthens their brand and creates consistency, while simultaneously shutting out their manufacturer competition from the market.
The smaller dealers in little towns are completely screwed. They'll probably perish and be replaced by the manufacturer's online presence. Perhaps local "mobile bike repair" outfits will pop up to do local assembly and support.
I, for one, think transparent, non-negotiable pricing would be a net benefit for consumers. While there has been consolidation in the automotive space, there's still a fairly large number of players, so there will still be competition on price.
The status quo, where prices are negotiated at dealerships, allows car companies to keep their real prices secret, and allows them to get more money from consumers who are less comfortable negotiating or don't have the time or energy to figure out what the real price should be. Fixed pricing will be higher for some, but it will also be lower for many. Fixed pricing also makes it much easier to compare prices across brands, which should result in a more competitive market.
The article ended just as it got good. What exactly does fixed price sales mean and why can't dealerships do that?
What is Ford's plan for dealerships? Tesla has dealerships too right? I walked past the one in Red Hook Brooklyn. Or maybe that was just servicing? But they did have new cars there.
And why won't Ford be advertising EVs? Super bowl ads always have car commercials. How else are they going to be able to tell people about the EVs? Unless they plan only to use their existing clout to attract people once they're already in the dealership or site?
Tesla has corporate owned stores, which are different from dealerships which are independent businesses. The staff there will help you order a car, but ultimately they're just clicking through the website with you. All orders are processed through the website, and go into the same central queue.
Probably. But DTC gives the brand a better relationship with the customer / market. Why wait for what gets filtered back from the dealerships? Why not have a direct relationship with a higher quality signal?
I say this because approx every month I get a postcard from a local dealership that references a car I haven't had for 12+ yrs. My sense is, many dealerships are highend mom & pops. That is, they suck at marketing.
Tesla, at least in seattle, has a few demonstration rooms where you can see the cars and drive them and a human facilitates. Purchases though are done online. Service is done at largish service centers far from the demonstration rooms that are in pretty expensive places, like luxury shopping malls or SLU.
Fixed price means what it says - no negotiation, just a fixed price.
Advertising is probably unnecessary. Word of mouth more than exceeds their production capacities.
Tesla dealerships are service and test drive. If you go there and buy a car they'll just walk you to a kiosk and you order it online the same way you would from home.
Tesla's "dealers" won't sell you a car. They'll service it, and take you on a test-drive, but when it comes time to order, you still go to the website.
There are still a lot of showrooms that do nothing but “sell” cars. Tesla uses their model to have locations in major upscale malls. I assume Ford will follow a similar model for EVs.
None of this amounts to much while Ford's ability to produce EVs remains low. Ford sells about a million ICE trucks per year in the US, but they're only planning about 150k total F-150s Lightning through mid-2023, and the waiting list is multiple years long. (For comparison, Tesla now sells 100k EVs per month.)
What's the bottleneck with Ford building electric powertrains? Is it still the semiconductor shortage? Batteries? Production tooling?
The dealer lobby is extremely powerful. Here in Michigan they give to both parties. When they wanted to stop Tesla from having showrooms in the state they got a bipartisan bill passed at 2 am!
Just was talking to someone today from Ford and chatted about that story. I said how much are you going to pay the dealer for every EV sold in their territory? He said nothing like that has been in the press. I teased him that's not exactly a denial. Are they going to be paid something to have EV's in the showroom or available for test drives? I was told you will have to wait and see.
Dealers aren't going to need the amount of real estate they've got now. Dealers make the most money from service, used cars and finally new car sales. I have noticed that some dealers have made the investment to service EV's which includes training and a minimum of two charging stations.
But some dealers have chosen not to do so. I would imagine the dealers not moving to service EV's are at some point in the future going to take a buyout and close their dealership, but that's just a guess.
> It's unclear if Ford also plans to implement this sales strategy shift for its non-EV products.
Oh, I think it's pretty clear that unless this strategy goes totally off the rails, that's definitely where they're heading. It'll converge (albeit at different rates) with the shift away from selling non-EV products altogether.
Apart from the obvious and immediate profit bumps, there's knock-on effects, such as not forcing your customers to deal with the second least trusted profession in the USA. [1]
This article doesn't mention the fact that Ford is splitting into multiple units[0]. It makes sense for allowing current Ford dealerships to operate, however they may, but also allowing the online sales through a separate division with it's own business model.
This puts some real pressure on dealerships to change, as we slowly transition to a more EV world.
Polestar is doing the hybrid model too. online order, single price, single wait list and leveraging a set of volvo dealerships for delivery and maintenance. i think this is the perfect model.
Corwin Ford came into our area, put all of the other dealers out of business over the last 10 years and hold forth with terrible prices and service. I avoid them at all cost.
The dealer model (not just for cars) may have been a “good thing” once upon a time. When I talk to older generations, they always seem taken with the idea of a “good dealer”, someone to “take care of you.” But by and large (there are some exceptions), dealer model seems to have generally become less mutually beneficiary. In most domains, I loathe them.
So last year I was looking to buy a car (and now you know where I am going with this). I honestly went in thinking may be just perhaps dealerships have become less scummy after all these years. Boy was I in for a shock. Call it supply demand or what not the completely unscrupulous slapping of MVA on cars whose supply was constrained because of their miscalculation made me sooo damn mad. Heck I even wondered why the hell did Daniel Caruso chose to be a car dealer in Cobra Kai is beyond me!!!
In many other parts of the world,
even North America, the MSRP is the price of the car. There is no negotiating (at least, not upwards, and definitely not usually).
I don't understand why this is newsworthy? I bought a non-EV in the last decade by putting the order together online on the manufacturer's national website, then processing it through a dealership.
Buying a car in the US was so unnecessarily stupid because of all the haggling and pussyfooting around what the damn thing is actually going to cost.
If you haven't bought a car in the last year or so then you're out of the loop. Stock is low and prices are above MSRP pretty much across the board. For especially in demand cars like the Lighting or Toyota RAV4 Prime the "dealership markup" can be 50% more than MSRP or more.
I just bought a new car and it was an awful experience having to go through a dealer. I pray that some time in my lifetime we see direct to consumer car sales.
The dealership model has become a liability to brands and it is high time they take control back. Can you imagine Apple letting some local business put their name and logo on their store?
Sure, some dealerships are solid but when ‘used car salesman’ is a trope, you have a problem. The current supple deficit and resulting dealer markups are a direct result of a short term perspective that damages the overall brand in the long run.
I’d love that. I hate having to endure the process of making decisions based on partial information given in unstructured form by an often unreliable car salesperson.
That’s my day job, thank you. I’m paid for bringing out actual actionable intelligence from such things and I’d like my personal life to be easier.
Everywhere that manufacturers let you make order and wait for your custom car instead of buying from a lot (isn’t that a US only thing?) the dealerships didn’t go away.
Dealerships are important as showrooms, service centers, a place to sell (slightly) used cars with brand warranties etc.
It's my dream to convert a Ford Transit into a campervan, and I've been eyeing the hybrid/EV ones for a while, so this is great! I'll probably not get it new, but still!
Counter: Ford dealerships actually give them a big advantage over Tesla. This is because there are close to 3,000 dealerships in the US compared to less than 200 for Tesla.
Maybe. You know the rule: I bet 20% of those dealerships do 80% of the sales. Or at least 80% of Ford's profits.
The overhead of HQ servicing each dealership is (approx) fixed. Some cover that with plenty to spare, others might be barely breakeven (after dealer incentives et al).
That said, even 20% of 3k is still 600 so that does feel like a positive for Ford (even without the dead weight).
- I have nothing against such model IF I can test-drive for free the vehicle, so if some vendor bring the vehicle to my home, 24h test, they'll get back no question asked, totally free;
- I understand big car industry want to use modern surveillance capitalism for target sells, not much an issue since we already know how this system work;
- IF they also provide on-side under-warranty service... They buy back used vehicles with someone who came and evaluate locally... It might be even good IMVHO.
It's clear the society at a certain level have shifted back to a direct producer-to-customer model, witch might be perfectly good IF is general supported by standard means, or might be a way to exploit consumers and intermediate OEMs like happen in many cases (cfr. Amazon, Wallmart etc to cite USA examples). The whole issue is probably a whole society comprehension of such model and I doubt there is such understatement without people training...
In an ideal world I'd imagine pop-up touring shops where you can test drive cars and order them at a kiosk on-the-spot. A test drive circus! Ha!
Giant already does this with bikes, in my area. They rent out carpool lots in low periods (weekends, basically) and people come from all over to check out their bikes.
Sure it's a little less instant gratification, but I wouldn't mind waiting a couple weeks for a Mazda pop-up to come by if it ends up being cheaper than a dealership.
