Agreed. The only thing is Trade-Ins. Without a way to do exchange trade (which is why I still have the Mustang and the dealer still has the truck I need).
Solve the trade issue and I'd never step foot on another lot. Don't say carmax because there isn't a carmax within a hundred miles of here.
If not for trades I would have been ordering vehicles delivered to my door.
In the case of manufacturers that have currently established dealerships here, they signed franchise agreements, many times 40-50 years ago (or longer) with the dealerships. They also forced dealerships to many times spend inordinate amounts of money to re-build the buildings dealerships were housed in, whether the buildings needed it or not.
I suppose manufacutrers could let those franchise agreements lapse over time, and not renew them. But again, we're not talking about months or years for that to happen. That would take decades.
That said, it makes no sense to me why a newcomer like Tesla can't indeed sell their own cars at their own company stores.
Are dealerships needed? I think for the people here, probably not. For those who don't know a steering wheel from a fly wheel, probably so.
That said, it makes no sense to me why a newcomer like Tesla can't indeed sell their own cars at their own company stores.
What's so special about the automobile industry anyway? To buy a car you have to go through a dealership. Check! To insure it you have to go through an insurance agency. Check! And to put gas in the tank you have to go a franchised gas station. Check! No wonder the cost of transportation is so high, too many middle men.
There are two areas where dealerships are important, warranty repairs and trade-ins.
The auto manufacturers would have to create "authorized warranty repair facilities" which could easily be done in the very same buildings / shops formerly occupied by the independent dealerships.
The primary reason that "trade-in's" are necessary is sales tax. I recently traded in a 2011 Silverado for a 2013 Silverado. The Chevrolet dealer gave me $23,500 for my trade, which is just about what CarMax would have given me. But if I had sold to CarMax and then purchased the new truck for cash, I would have been out of pocket 6.25% sales tax on that $23,500. $1,468.75 to be precise. Yes, this matters. No, there is no way around it under present tax law. (Except in Oregon, which has no sales tax, if memory serves.)
There are other states with sales tax but no credit for trade in, such as my home state of Virginia. When you buy a vehicle you pay 3% title tax on the purchase price. There is no reduction for trade ins. Starting next month our vehicle sales tax will go up to 4%
The dealer network is advantageous to the dealership owners and the manufacturers. They have massive political lobbies. I don't see the current business model changing anytime soon. I wish it would - but my wish is no match for their money. I think the current model stinks for the salespeople and the consumer, but the franchise laws aren't there for our benefits.
2011 Toyota Camry, 2014 Jeep Wrangler, 2017 Honda Civic Coupe, 2019 Toyota Rav4 Hybrid XSE, 2021 Toyota Tundra, 2022 Toyota 4Runner, 2022 Tesla Model 3
"One shop repaired typewriters and the other shop was a radio and TV repair shop."
There was a guy who repaired TVs out of the back of his house and I remember my father taking our late 50s set in for repair. Seemed like it took at least a week for repair--talk about feeling deprived! That was probably about 1962.
There was another more professional looking outfit called "Loy's TV repair". My God, that place started in the 60s and didn't finally cease operation until around 2000 or so. I suspect the owner retired. In my own burg there was a fellow who repaired electronics because I remember having my beta VCR repaired twice (a real waste of money, I know). I think he also went out of business around 2000, maybe a bit before. he was super honest and a good repairman, but incredibly slow.
Now everyone just chucks their stuff--even when they don't need to. Still see people getting computers, sewing machines and vacuums fixed.
Televisions are certainly one product that has become better and cheaper over time (like computers). Another niche item that has become much better and less expensive are consumer telescopes. back in the 60s a small 4"-6" reflector on a decent mount cost $200-$300 at Edmund Scientific. Adjusting for inflation you can get something with greater aperture, computer go-to pointing that includes a catalog of thousands of objects with much, much better optics and a very fine mount for a fraction of the old stuff.
I'm posting a link to our local paper for an article about the Hyundai/Chrysler dealership being sued by 4 plaintiffs who each allege various acts of malfeasance on the part of the dealership. Nothing new there, but I told isell and others that this dealership constantly bombarded me with these ridiculous key come-ons, guaranteed price offers for my used Mazda and screamer ads. The dealership is owned by a former Heisman winner and pro football star who seems to have little to do with how the business is run and doesn't live in the state. Wonder if this will besmirch his reputation (pending outcome, of course).
He now also owns the Honda Dealership, which is very disappointing to me as a former Honda owner whose next vehicle might be a CR-V. Can the Honda dealership really be run differently from the other store? The dealerships are next door to one another. Maybe the management is different and has a different business philosophy?
There is one locally that is still doing it. When I was helping to clean out my previous employers facility, I came across cases of IBM Selectric ribbons and found one typewriter shop who took them. I spoke with the owner and he said his business is doing well due to hipsters who think laptops are too mainstream.
Solve the trade issue and I'd never step foot on another lot.
The trade in issue is a good reason for having dealerships. Another reason is - believe it or not - sales people.
Most successful companies have a good sales force. Without sales people not much business gets done.
If one car company decided to only sell cars online they would lose a huge share of the marketplace. People want to feel the new car, and see it, and sit in it. And, they need a salesperson to get them through the buying process. Dealerships are an extra expense, but they are necessary to make the sales happen.
West Virginia is 35 miles away and you do get the tax advantage. So if VA is going to 4% I'm going to W VA to buy as 4% of $30 or $40k is worth it.
I don't think this would work - you would still have to title it in VA and they would want the tax (the tax is called a title tax). Or am I missing something?
For example, when the Honda Odyssey was so hot (back in the early 2000s) I bought one. The closest dealer with one in stock was in North Carolina. I bought it there but it was titled in VA so I paid the tax to VA. At least that's what I thought happened...it has been more than 10 years...
2011 Toyota Camry, 2014 Jeep Wrangler, 2017 Honda Civic Coupe, 2019 Toyota Rav4 Hybrid XSE, 2021 Toyota Tundra, 2022 Toyota 4Runner, 2022 Tesla Model 3
I agree with you about salespeople driver - salespeople are needed, but franchised dealers are not (my opinion). The dealerships could be owned by the manufacturers. I would think this would give more consistency from dealer to dealer, which would hopefully mean a better customer experience.
I don't think it will ever happen, at least not in our lifetimes
2011 Toyota Camry, 2014 Jeep Wrangler, 2017 Honda Civic Coupe, 2019 Toyota Rav4 Hybrid XSE, 2021 Toyota Tundra, 2022 Toyota 4Runner, 2022 Tesla Model 3
Same here...it's been a while, but I did ask in W VA and he said tax was on the difference. My first purchase in W VA was in 2005 and the two states didn't have any relations. I traded a 4Runner for a Solara. Price difference was in the 3 thousand dollar range which I put on a debit card. They didn't know what to do about the Certificate of Origin (becomes a title at DMV) so they handed it to me. That essentially gave me an untitled new car and COO making me a dealer if I had chosen to be one (which I did not).
I looked it up and the title is actually a tax. On the purchase order it listed Sales Tax, Title Tax ($10) and Tags. Then I saw how little I paid in doc fees ($49). I'm definitely going back to W VA for my next car. Mustang which was an OTD deal had $349 on the paperwork. I was happy with the deal and didn't even look before now. Now I am going to Magic City for my free inspection, oil chg and a few runs through the car wash just to get every bug off. $349 Grrrr.
The dealerships could be owned by the manufacturers.
Not sure, but the problem could be the cost. Companies usually franchise because they don't have to pay to won those dealerships, and try to staff them. By selling dealerships to entrepeneurs, they assume the risk, they have to carve out a market to survive.
It seems we could buy direct and we would cut out the middle man, it would mean you would sell fewer cars and prices may actually go up.
Really, have to find a whole new model. Think about service areas, test drives, asking questions, contact person (salesperson). It would be difficult without a dealership.
I think you should look at the "after sale" experience you will have with a privately owned dealership as opposed to one that might be owned by the manufacturer. What I mean by this is in cases where warranty repairs are made.
We have all experienced times when a manufacturer either refused a repair or made it difficult for a customer. That is when a dealership gets involved and goes to bat for their customer or even absorbs costs to satisfy the customer. If the dealership was owned and operated by the manufacturer, you would be helpless to get a decision overturned.
Another aspect of manufacturer owned dealership are the costs involved in managing and administering dealerships. Manufacturers don't want anything to do with the sales process. They are good at building cars, period. The costs involved in equipment, training, managing and administrating such a business, not to mention negotiating leases on land and buildings and construction plus the costs of insurance would make such investments so prohibitive that the costs of sales would become so outrageous car prices would rise substantially (as if they aren't outrageous now)!
Car manufacturers, through franchised dealerships, are now able to deliver their products to worldwide markets - but would be very limited on distribution if they had to "own and manage" all showrooms.
Driver is correct - people (consumers) want to see, touch and drive the cars they buy and salespeople are at the heart of the entire process.
Eventually, with the advent of virtual showrooms, there will be more of an incentive to do away with a multitude of dealerships. But conglomerates like Penske and AutoNation are the future of franchising. The small dealership will only be viable in small towns while the large franchisees will dominate the cities. AutoNation owns and operates hundred and hundreds of dealerships - and are growing by leaps and bounds.
Well, so much for the straight line improvement for almost a year now (after the toxoplasmosis complication). I to to Sloan last week and get a call a ay later saying my new immune system tested positive for Epstien Barr. My old system had it but my donor didn't. It may or may not turn into a big deal. It was with my old system but it's a common virus that most. People shake off though it stays in you forever.
So, last Saturday I pop a swollen gland. Monday I call the doc to report that. They call back when I'm with a friend who couldn't just cancel her whole day for my plans but the doc says come up today. So I drop her back and start up. Normally with decent traffic it's a little over two hours. We had flash floods here yesterday and 20 miles of the Parkway were closed. I had to take a pretty but time consuming alternate route. Long story short it took four hours and used up my whole day. No report but I had to go do a pet scan today. At least today it was nice, I was able to go to Sloan's facility in a very pretty section of Jersey and all went fine. Kills all my time but it's done. I await a result.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
I keep seeing the same Tesla cruising around my burg. I know there's not a "dealership/manufacturer's store" anywhere close (I don't even think there's one in any of the surrounding states).
Every time I see the car, the driver's either going the opposite direction, or is 2-3 cars in front of, or behind me.
I'd love to talk to him about the car and how he came about getting it.
You bring up some good points Mike. I'm really just thinking about the new car sales experience. I can see how warranty work by manufacturer owned dealers could be problematic. In my mind new car sales would be separate from service/used cars. Not sure how that would work...
I buy a car every year, for the most part. I rarely trade - I usually sell my "old" vehicles privately. Lately I really feel bad for the salespeople. There has to be a way to make that a better job, more like it used to be.
2011 Toyota Camry, 2014 Jeep Wrangler, 2017 Honda Civic Coupe, 2019 Toyota Rav4 Hybrid XSE, 2021 Toyota Tundra, 2022 Toyota 4Runner, 2022 Tesla Model 3
I can see how warranty work by manufacturer owned dealers could be problematic.
While this may a problem, the internet has changed the business model for many industries. For example, the travel agency on the corner block has all but disappeared. Higher education is a sector that is changing rapidly. No longer does a student have to attend a brick and mortar university to earn a college degree. In fact, some studies show that some students learn faster and better taking courses in an online format rather than face-to-face.
The way I envision it, auto manufacturers would have display centers in strategic locations, similar to the Apple iStores. If the customer likes what he sees he can arrange a test drive at a convenient time and place. As to warranty work, the dealerships would no longer have a monopoly on their inflated cost of service.
Take for example, the “Right to Repair” law in Massachusetts that allows your local mechanic to have access to info that was only available to car dealerships. Now you can take your car to any service or repair facility with no fear of voiding your warranty. Don't know if this practice is widespread in other states but it is a step in the right direction. With so many small repair shops bidding for your business, price declines are inevitable.
The future is here, and no matter the how powerful the dealership lobbyists are they cannot stand in the way of progress.
I've been in two Tesla storefronts, Santa Monica, CA and Natick (West of Boston), MA. Other than the people working there, eerily identical!
I believe there is one Tesla in my town, I see one or two others a week on the roads outside of Boston.
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
If you were in my garage, you'd see an even amount of Jags and 535s!
I'm torn, on the one hand I enjoy the exclusivity of my XK, but on the other I want Jag to survive and thrive as a marque. Which models are you seeing most of , XF or XJ?
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
. Now you can take your car to any service or repair facility with no fear of voiding your warranty.
But repair work is where a lot of money is made at the dealership level. And, who do you trust, there are a lot of indie garages that just aren't going to invest in the equipment needed to fix today's complex cars.
Didn't Hyundai try bringing an Eqqus to your door so you could go on a test drive....didn't work out. Sometimes the franchise model works best...think McDonalds. The franchise owner has to maximize his profit by running an efficient well run store. The whole concept may not have worked if the stores were company owned - head office could never monitor all it's stores. And employees aren't going to work as hard as an owner.
Had to look them up to see which was which....those X names make it difficult...I guess the higher the letter the larger more expensive the car.
They may be worth a look next time I trade. I thought the S types looked too old fashioned, but, now that I am a few years older, I like the S Type too...classic good looks, very stately;
"We have all experienced times when a manufacturer either refused a repair or made it difficult for a customer. That is when a dealership gets involved and goes to bat for their customer or even absorbs costs to satisfy the customer."
Mike--
Although I never have had this experience with a car, my local bike shop went to bat for me with a large bike company, Trek after one of my wheel hubs snapped. I figured I was going to be out several hundred dollars for a new wheel, but my bike shop owner contacted Trek, who apparently knew of problems, and Trek replaced not just the defective wheel, but the other one as well. The wheels were out of warranty and the replacement wheelset retailed for $750 so, as you might imagine, I was stunned! It can pay to develop relationships with local businesses even when they might charge more initially.
Do you think Walmart would go the extra mile for a customer who bought a bike from them after it was well out of warranty? Perhaps, but I doubt it. They will take just about anything back, though, sometimes even without a receipt. Plenty of customers abuse that policy.
"There are two here in my town of 50,000 - both white. Sharp looking vehicle!
I've been in the Tesla storefront at the local mall located in the south suburbs of Denver."
I can't remember if it was two or three years ago in March that I was visiting art galleries in the Chelsea District in NYC. On the ground floor of one of the buildings there was a Tesla dealership. I even took photos of their two demo cars (and facade), both the Lotus-based model they sold at that time. I remember thinking that NYC was probably a perfect place for Tesla since there are plenty of buyers with deep pockets and they would never be far from home if they just drove around Manhattan so no worries about being out of range of a charging station.
I post this knowing driver and quite a few others may be putting together a summer reading list and this non-fiction books will surely appeal to a broad spectrum of posters on this forum. It's called Engines of Change: A History of the American Dream in Fifteen Cars. It's written by Paul Ingrassia who writes for the Wall Street Journal on automotive issues and won the Pulitzer Prize for one of his previous books. I think this book will especially impact Driver, GG, isell, Roadburner, NY, Mike and likely quite a few others.
1) Anyone care to guess the author's list of 15 cars that shaped the American dream in some form or fashion? Most are logical, although not all can be called glamorous or even desirable. I think about half are American and the others are foreign nameplates.
2) Anyone want to guess which car in 1975 got 39 mpg and met the new federally mandated emissions requirements without a bulky catalytic converter even using leaded gasoline. here's a hint: the vehicle came in just two colors, yellow and orange. According to the writer both colors were bright enough to cure a hangover. This fact is not even about the car listed as one of the 15 and is more about the company and their corporate mentality.
3) Also, which car was released on April Fool's Day in 1970 and died in 1980? It had a name that suited it's peculiarities and issues perfectly.
The book is an easy read and full of interesting tid-bits and trivia. I don't think any chapter is longer than 30 pages and most are less. Most fascinating to me is that my wife gave it to me for my birthday and she know little or nothing about cars, but really hit a home run with this gift.
1) I many not know all 15, but I'm guessing that the Model T, mid 50's Chevrolet and VW Beetle are on the list
2) Honda Civic
3) I would say Chevrolet Vega, but probably not right
(speaking of the Vega, who here watches Mad Men? This season the folks at SCDP-GCG are working with Chevrolet to develop the ad campaign for their new car, code named XP-887. Don Draper and folks think it's some sort of new flashy sports car, but it's really the Vega.)
Engines of Change: A History of the American Dream in Fifteen Cars.
Gogi, that does look like a great book....ranked 20000 on amazon with 4 1/2 stars, and people really like it.
I cheated and read some of the blurbs, so some cars are; Corvette, the Beetle, and the Chevy Corvair, Mustang, Pontiac GTO , Henry Ford’s Model T, as well as Honda’s Accord, the BMW 3 Series, and the Jeep, Prius.
The book sounds like fun, but I understand he makes fun of bmw drivers :mad:
I buy a car every year, for the most part. I rarely trade - I usually sell my "old" vehicles privately
As everyone here knows, I buy a car each year, as well (sometimes even more frequently), but I trade my "old" cars because they always have low mileage, never have a ding or a scratch, receive $2000 - $3000 more for my trades than Manheim or NADA wholesale prices from my dealer, and, most importantly, because of no sales tax on the trade values (only the difference between the trade value and selling price is taxed). So if I sold my cars privately, I would have to get $2000 - $3000 more just to break even.
If there was no franchise dealer networks, my trade would be difficult to shop and there would be one price for new cars - just like Saturn attempted - and we all know what happened to Saturn.
There would be no competition for my business - the end of capitalism? It would be impossible to buy a Mercedes at a discounted price. The only competition would be between manufacturers. I wonder if that's what we would want!
But I do agree that the process of buying a car can be not only intimidating (which most of the time it is), but highly stressful and not necessarily a fair process. Even though I buy cars frequently, I hate the buying process. I would prefer to do it the way my dad did when he bought Cadillacs every year - he had an agreement with the dealer that a new car each year would cost "X dollars". The amount was known at the point of sale for each year. But because prices are always going up, it is impossible to do business that way.
There would be no competition for my business - the end of capitalism? It would be impossible to buy a Mercedes at a discounted price.
There is a flaw in your logic. You are assuming pricing schemes are static, i.e. if manufacturers were selling directly to consumers, their pricing markups would simply be a sum of their current markup markup of retailers and they would simply pocket any money they may save due to direct sale. While this MIGHT happen, it is very UNLIKELY. Today's pricing structure (list price, invoice price, holdback, whatever) and pricing strategies (discount, no discount, additional markup) are exact results of current retail channels are independent entities. There is no saying what that combined production and retail markup would be in direct sale.
In short - nobody really knows how the pricing would look like if MB were selling directly. We just don't know. They might as well be lower, even if not oficially discounted. One thing would be sure - they'd have to be much more careful with pricing than now. If price is the price is the price, then you walking away or clicking "close" on the window means no transaction. No "let me talk to manager", no "we can work on that". So better be right in pricing they'll be stuck with lots of inventory and nobody would be able to push it for them.
But repair work is where a lot of money is made at the dealership level. And, who do you trust, there are a lot of indie garages that just aren't going to invest in the equipment needed to fix today's complex cars.
In the current market model, they won't.
If there were no dealerships, of course they would. Because now they could make money. They could do warranty work on multiple brands.
Sometimes the franchise model works best...think McDonalds. The franchise owner has to maximize his profit by running an efficient well run store. The whole concept may not have worked if the stores were company owned - head office could never monitor all it's stores. And employees aren't going to work as hard as an owner.
And sometimes the corporate-owned one does. That's why McDonald's also owns a lot of them.
If there was no franchise dealer networks, my trade would be difficult to shop and there would be one price for new cars - just like Saturn attempted - and we all know what happened to Saturn.
Saturn didn't go away because of the one price for new cars. It went away because GM didn't give them new products and it removed everything that made Saturn a Saturn.
I agree with that about Saturn, they just never let them develop their product. Not too long ago, I read that MB has a large number of factory stores in either Germany or Europe overall and they are looking to divest them.
2024 Ford F-150 STX, 2023 Ford Explorer ST, 91 Mustang GT vert
And sometimes the corporate-owned one does. That's why McDonald's also owns a lot of them.
McDonalds may want to own some...but, it won't work too well if they tried to own all. Cost would be prohibitive, and lack of motivation....and how do you watch over stores in small towns all over the country.
Sometimes it is better to just farm that part of the business out.
Having said all that, weren't they going to actually have showrooms and sell cars at places like Costco?
At time Saturn was killed one price model was all but gone. It was the first SL and SC models that they were able to sell that way. When LS and Ion arrived, it was over. Those things were just awful. Astra and Aura were much better, but too late and too expensive.
McDonalds may want to own some...but, it won't work too well if they tried to own all. Cost would be prohibitive, and lack of motivation....and how do you watch over stores in small towns all over the country.
It could be done just like it's done today - by local store managers reporting to regional managers reporting to ownership. It's not like each McD's is individually owned - it's mid size and large corporate owners that franchise McD's and they have the same sort of management structure. Look at Darden Restaurants - Olive Garden and Red Lobster as well as other chains - over 2100 locations and all are corporate owned. There isn't one franchised location in North America.
Now I'm not saying that's the best way to do it but it is done. IMHO, the automakers aren't interested in running dealerships - they are auto makers, not retailers. They would rather push the inventory risk of finished product, repair parts, facility management, et al down the line.
The infrastructure manufacturers have in place to support the dealerships could go towards refining their own direct sales efforts. Manufacturers have sales people. I've talked to their Regional Sales Reps many times (usually to resolve an issue either with my car, or the dealership). So, they have the experience. They could probably even cut out the number of locations if all of them were company owned.
The down side would be changing the culture of buying a car. Most have said that they don't like the negotiation process. But, would they embrace the "one price" for all structure that manufacturers would put in place? Even if it meant lower prices?
But, would they embrace the "one price" for all structure that manufacturers would put in place? Even if it meant lower prices?
No way of saying. It is often we don't like the current situation, but when face a possibility of change, we suddenly opt for status quo, because it is always better to deal with known s..t than unknown. Plus, parties that have vested interest in maintaining current status quo are usually much more vigilant to fight against the change than those supporting the reforms. They'd scare the pants out of everybody. I can see those ads with ominus music, outlandish claims of prices going up threefold, gazilions of supposed lost jobs and the soft female voiceover "don't let it happen". The organizations with such noble names like "Coalition for low prices" or similar would be behind those ads.
Change is scary for one reason - people develop strategies and skills and networks to deal with current set of circumstances. They are conditioned to think and act certain way. Sweeping change would render those skills useless. Suddenly no feeling of "beating the system" and getting better price than your neighbor. What a void.
Comments
Agreed. The only thing is Trade-Ins. Without a way to do exchange trade (which is why I still have the Mustang and the dealer still has the truck I need).
Solve the trade issue and I'd never step foot on another lot. Don't say carmax because there isn't a carmax within a hundred miles of here.
If not for trades I would have been ordering vehicles delivered to my door.
2013 Mustang GT, 2001 GMC Yukon Denali
In the case of manufacturers that have currently established dealerships here, they signed franchise agreements, many times 40-50 years ago (or longer) with the dealerships. They also forced dealerships to many times spend inordinate amounts of money to re-build the buildings dealerships were housed in, whether the buildings needed it or not.
I suppose manufacutrers could let those franchise agreements lapse over time, and not renew them. But again, we're not talking about months or years for that to happen. That would take decades.
That said, it makes no sense to me why a newcomer like Tesla can't indeed sell their own cars at their own company stores.
Are dealerships needed? I think for the people here, probably not. For those who don't know a steering wheel from a fly wheel, probably so.
What's so special about the automobile industry anyway? To buy a car you have to go through a dealership. Check! To insure it you have to go through an insurance agency. Check! And to put gas in the tank you have to go a franchised gas station. Check! No wonder the cost of transportation is so high, too many middle men.
trade-ins.
The auto manufacturers would have to create "authorized warranty repair facilities" which could easily be done in the very same buildings / shops formerly occupied by the independent dealerships.
The primary reason that "trade-in's" are necessary is sales tax. I recently traded in a 2011 Silverado for a 2013 Silverado. The Chevrolet dealer gave me $23,500 for my trade, which is just about what CarMax would have given me. But if I had sold to CarMax and then purchased the new truck for cash, I would have been out of pocket 6.25% sales tax on that $23,500. $1,468.75 to be precise. Yes, this matters. No, there is no way around it under present tax law. (Except in Oregon, which has no sales tax, if memory serves.)
The dealer network is advantageous to the dealership owners and the manufacturers. They have massive political lobbies. I don't see the current business model changing anytime soon. I wish it would - but my wish is no match for their money. I think the current model stinks for the salespeople and the consumer, but the franchise laws aren't there for our benefits.
There was a guy who repaired TVs out of the back of his house and I remember my father taking our late 50s set in for repair. Seemed like it took at least a week for repair--talk about feeling deprived! That was probably about 1962.
There was another more professional looking outfit called "Loy's TV repair". My God, that place started in the 60s and didn't finally cease operation until around 2000 or so. I suspect the owner retired. In my own burg there was a fellow who repaired electronics because I remember having my beta VCR repaired twice (a real waste of money, I know). I think he also went out of business around 2000, maybe a bit before. he was super honest and a good repairman, but incredibly slow.
Now everyone just chucks their stuff--even when they don't need to. Still see people getting computers, sewing machines and vacuums fixed.
Televisions are certainly one product that has become better and cheaper over time (like computers). Another niche item that has become much better and less expensive are consumer telescopes. back in the 60s a small 4"-6" reflector on a decent mount cost $200-$300 at Edmund Scientific. Adjusting for inflation you can get something with greater aperture, computer go-to pointing that includes a catalog of thousands of objects with much, much better optics and a very fine mount for a fraction of the old stuff.
Gogiboy
He now also owns the Honda Dealership, which is very disappointing to me as a former Honda owner whose next vehicle might be a CR-V. Can the Honda dealership really be run differently from the other store? The dealerships are next door to one another. Maybe the management is different and has a different business philosophy?
http://www.stwnewspress.com/local/x756637137/Plaintiffs-file-lawsuits-against-ca- r-dealership-in-Stillwater
Gogiboy
Virginia has no sales tax advantage with a trade, but I would have needed a ride from carmax to the selling dealer.
West Virginia is 35 miles away and you do get the tax advantage. So if VA is going to 4% I'm going to W VA to buy as 4% of $30 or $40k is worth it.
Right now I'm nearing oil chg and inspection. Free from selling dealer, but I have to drive 75 miles just because my local dealer is a butt monkey.
2013 Mustang GT, 2001 GMC Yukon Denali
There is one locally that is still doing it. When I was helping to clean out my previous employers facility, I came across cases of IBM Selectric ribbons and found one typewriter shop who took them. I spoke with the owner and he said his business is doing well due to hipsters who think laptops are too mainstream.
Here is their king:
At least he doesn't need wi-fi!
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
The trade in issue is a good reason for having dealerships. Another reason is - believe it or not - sales people.
Most successful companies have a good sales force. Without sales people not much business gets done.
If one car company decided to only sell cars online they would lose a huge share of the marketplace. People want to feel the new car, and see it, and sit in it. And, they need a salesperson to get them through the buying process. Dealerships are an extra expense, but they are necessary to make the sales happen.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
I don't think this would work - you would still have to title it in VA and they would want the tax (the tax is called a title tax). Or am I missing something?
For example, when the Honda Odyssey was so hot (back in the early 2000s) I bought one. The closest dealer with one in stock was in North Carolina. I bought it there but it was titled in VA so I paid the tax to VA. At least that's what I thought happened...it has been more than 10 years...
I don't think it will ever happen, at least not in our lifetimes
Same here...it's been a while, but I did ask in W VA and he said tax was on the difference. My first purchase in W VA was in 2005 and the two states didn't have any relations. I traded a 4Runner for a Solara. Price difference was in the 3 thousand dollar range which I put on a debit card. They didn't know what to do about the Certificate of Origin (becomes a title at DMV) so they handed it to me. That essentially gave me an untitled new car and COO making me a dealer if I had chosen to be one (which I did not).
2013 Mustang GT, 2001 GMC Yukon Denali
I looked it up and the title is actually a tax. On the purchase order it listed Sales Tax, Title Tax ($10) and Tags. Then I saw how little I paid in doc fees ($49). I'm definitely going back to W VA for my next car. Mustang which was an OTD deal had $349 on the paperwork. I was happy with the deal and didn't even look before now. Now I am going to Magic City for my free inspection, oil chg and a few runs through the car wash just to get every bug off. $349 Grrrr.
2013 Mustang GT, 2001 GMC Yukon Denali
Not sure, but the problem could be the cost. Companies usually franchise because they don't have to pay to won those dealerships, and try to staff them. By selling dealerships to entrepeneurs, they assume the risk, they have to carve out a market to survive.
It seems we could buy direct and we would cut out the middle man, it would mean you would sell fewer cars and prices may actually go up.
Really, have to find a whole new model. Think about service areas, test drives, asking questions, contact person (salesperson). It would be difficult without a dealership.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
I think you should look at the "after sale" experience you will have with a privately owned dealership as opposed to one that might be owned by the manufacturer. What I mean by this is in cases where warranty repairs are made.
We have all experienced times when a manufacturer either refused a repair or made it difficult for a customer. That is when a dealership gets involved and goes to bat for their customer or even absorbs costs to satisfy the customer. If the dealership was owned and operated by the manufacturer, you would be helpless to get a decision overturned.
Another aspect of manufacturer owned dealership are the costs involved in managing and administering dealerships. Manufacturers don't want anything to do with the sales process. They are good at building cars, period. The costs involved in equipment, training, managing and administrating such a business, not to mention negotiating leases on land and buildings and construction plus the costs of insurance would make such investments so prohibitive that the costs of sales would become so outrageous car prices would rise substantially (as if they aren't outrageous now)!
Car manufacturers, through franchised dealerships, are now able to deliver their products to worldwide markets - but would be very limited on distribution if they had to "own and manage" all showrooms.
Driver is correct - people (consumers) want to see, touch and drive the cars they buy and salespeople are at the heart of the entire process.
Eventually, with the advent of virtual showrooms, there will be more of an incentive to do away with a multitude of dealerships. But conglomerates like Penske and AutoNation are the future of franchising. The small dealership will only be viable in small towns while the large franchisees will dominate the cities. AutoNation owns and operates hundred and hundreds of dealerships - and are growing by leaps and bounds.
Just my opinion!
2024 Genesis G90 Super-Charger
So, last Saturday I pop a swollen gland. Monday I call the doc to report that. They call back when I'm with a friend who couldn't just cancel her whole day for my plans but the doc says come up today. So I drop her back and start up. Normally with decent traffic it's a little over two hours. We had flash floods here yesterday and 20 miles of the Parkway were closed. I had to take a pretty but time consuming alternate route. Long story short it took four hours and used up my whole day. No report but I had to go do a pet scan today. At least today it was nice, I was able to go to Sloan's facility in a very pretty section of Jersey and all went fine. Kills all my time but it's done. I await a result.
I am hoping for positive results for you frezo. You have gone through so much to get this far........hope you are still improving.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Every time I see the car, the driver's either going the opposite direction, or is 2-3 cars in front of, or behind me.
I'd love to talk to him about the car and how he came about getting it.
Keep us posted.
I'd be worried the Telsa will become the next Betamax. There are bound to be better ways to save fuel in the near future.
btw...about seeing cars, I have noticed a lot of Jaguars lately, I see more Jaguars than 535s!
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
I buy a car every year, for the most part. I rarely trade - I usually sell my "old" vehicles privately. Lately I really feel bad for the salespeople. There has to be a way to make that a better job, more like it used to be.
While this may a problem, the internet has changed the business model for many industries. For example, the travel agency on the corner block has all but disappeared. Higher education is a sector that is changing rapidly. No longer does a student have to attend a brick and mortar university to earn a college degree. In fact, some studies show that some students learn faster and better taking courses in an online format rather than face-to-face.
The way I envision it, auto manufacturers would have display centers in strategic locations, similar to the Apple iStores. If the customer likes what he sees he can arrange a test drive at a convenient time and place. As to warranty work, the dealerships would no longer have a monopoly on their inflated cost of service.
Take for example, the “Right to Repair” law in Massachusetts that allows your local mechanic to have access to info that was only available to car dealerships. Now you can take your car to any service or repair facility with no fear of voiding your warranty. Don't know if this practice is widespread in other states but it is a step in the right direction. With so many small repair shops bidding for your business, price declines are inevitable.
The future is here, and no matter the how powerful the dealership lobbyists are they cannot stand in the way of progress.
There are two here in my town of 50,000 - both white. Sharp looking vehicle!
I've been in the Tesla storefront at the local mall located in the south suburbs of Denver.
I believe there is one Tesla in my town, I see one or two others a week on the roads outside of Boston.
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
I'm torn, on the one hand I enjoy the exclusivity of my XK, but on the other I want Jag to survive and thrive as a marque. Which models are you seeing most of , XF or XJ?
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
But repair work is where a lot of money is made at the dealership level. And, who do you trust, there are a lot of indie garages that just aren't going to invest in the equipment needed to fix today's complex cars.
Didn't Hyundai try bringing an Eqqus to your door so you could go on a test drive....didn't work out.
Sometimes the franchise model works best...think McDonalds. The franchise owner has to maximize his profit by running an efficient well run store. The whole concept may not have worked if the stores were company owned - head office could never monitor all it's stores. And employees aren't going to work as hard as an owner.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
I see a lot more XFs;
Than XJs
Had to look them up to see which was which....those X names make it difficult...I guess the higher the letter the larger more expensive the car.
They may be worth a look next time I trade. I thought the S types looked too old fashioned, but, now that I am a few years older, I like the S Type too...classic good looks, very stately;
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Mike--
Although I never have had this experience with a car, my local bike shop went to bat for me with a large bike company, Trek after one of my wheel hubs snapped. I figured I was going to be out several hundred dollars for a new wheel, but my bike shop owner contacted Trek, who apparently knew of problems, and Trek replaced not just the defective wheel, but the other one as well. The wheels were out of warranty and the replacement wheelset retailed for $750 so, as you might imagine, I was stunned! It can pay to develop relationships with local businesses even when they might charge more initially.
Do you think Walmart would go the extra mile for a customer who bought a bike from them after it was well out of warranty? Perhaps, but I doubt it. They will take just about anything back, though, sometimes even without a receipt. Plenty of customers abuse that policy.
Gogiboy
I've been in the Tesla storefront at the local mall located in the south suburbs of Denver."
I can't remember if it was two or three years ago in March that I was visiting art galleries in the Chelsea District in NYC. On the ground floor of one of the buildings there was a Tesla dealership. I even took photos of their two demo cars (and facade), both the Lotus-based model they sold at that time. I remember thinking that NYC was probably a perfect place for Tesla since there are plenty of buyers with deep pockets and they would never be far from home if they just drove around Manhattan so no worries about being out of range of a charging station.
Gogiboy
1) Anyone care to guess the author's list of 15 cars that shaped the American dream in some form or fashion? Most are logical, although not all can be called glamorous or even desirable. I think about half are American and the others are foreign nameplates.
2) Anyone want to guess which car in 1975 got 39 mpg and met the new federally mandated emissions requirements without a bulky catalytic converter even using leaded gasoline. here's a hint: the vehicle came in just two colors, yellow and orange. According to the writer both colors were bright enough to cure a hangover. This fact is not even about the car listed as one of the 15 and is more about the company and their corporate mentality.
3) Also, which car was released on April Fool's Day in 1970 and died in 1980? It had a name that suited it's peculiarities and issues perfectly.
The book is an easy read and full of interesting tid-bits and trivia. I don't think any chapter is longer than 30 pages and most are less. Most fascinating to me is that my wife gave it to me for my birthday and she know little or nothing about cars, but really hit a home run with this gift.
Gogiboy
2) Honda Civic
3) I would say Chevrolet Vega, but probably not right
(speaking of the Vega, who here watches Mad Men? This season the folks at SCDP-GCG are working with Chevrolet to develop the ad campaign for their new car, code named XP-887. Don Draper and folks think it's some sort of new flashy sports car, but it's really the Vega.)
IIRC, it was the Civic CVCC.
Gogi, that does look like a great book....ranked 20000 on amazon with 4 1/2 stars, and people really like it.
I cheated and read some of the blurbs, so some cars are;
Corvette, the Beetle, and the Chevy Corvair, Mustang, Pontiac GTO , Henry Ford’s Model T, as well as Honda’s Accord, the BMW 3 Series, and the Jeep, Prius.
The book sounds like fun, but I understand he makes fun of bmw drivers :mad:
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
As everyone here knows, I buy a car each year, as well (sometimes even more frequently), but I trade my "old" cars because they always have low mileage, never have a ding or a scratch, receive $2000 - $3000 more for my trades than Manheim or NADA wholesale prices from my dealer, and, most importantly, because of no sales tax on the trade values (only the difference between the trade value and selling price is taxed). So if I sold my cars privately, I would have to get $2000 - $3000 more just to break even.
If there was no franchise dealer networks, my trade would be difficult to shop and there would be one price for new cars - just like Saturn attempted - and we all know what happened to Saturn.
There would be no competition for my business - the end of capitalism? It would be impossible to buy a Mercedes at a discounted price. The only competition would be between manufacturers. I wonder if that's what we would want!
But I do agree that the process of buying a car can be not only intimidating (which most of the time it is), but highly stressful and not necessarily a fair process. Even though I buy cars frequently, I hate the buying process. I would prefer to do it the way my dad did when he bought Cadillacs every year - he had an agreement with the dealer that a new car each year would cost "X dollars". The amount was known at the point of sale for each year. But because prices are always going up, it is impossible to do business that way.
2024 Genesis G90 Super-Charger
There is a flaw in your logic. You are assuming pricing schemes are static, i.e. if manufacturers were selling directly to consumers, their pricing markups would simply be a sum of their current markup markup of retailers and they would simply pocket any money they may save due to direct sale. While this MIGHT happen, it is very UNLIKELY. Today's pricing structure (list price, invoice price, holdback, whatever) and pricing strategies (discount, no discount, additional markup) are exact results of current retail channels are independent entities. There is no saying what that combined production and retail markup would be in direct sale.
In short - nobody really knows how the pricing would look like if MB were selling directly. We just don't know. They might as well be lower, even if not oficially discounted. One thing would be sure - they'd have to be much more careful with pricing than now. If price is the price is the price, then you walking away or clicking "close" on the window means no transaction. No "let me talk to manager", no "we can work on that". So better be right in pricing they'll be stuck with lots of inventory and nobody would be able to push it for them.
2018 430i Gran Coupe
In the current market model, they won't.
If there were no dealerships, of course they would. Because now they could make money. They could do warranty work on multiple brands.
And sometimes the corporate-owned one does. That's why McDonald's also owns a lot of them.
Saturn didn't go away because of the one price for new cars. It went away because GM didn't give them new products and it removed everything that made Saturn a Saturn.
Not too long ago, I read that MB has a large number of factory stores in either Germany or Europe overall and they are looking to divest them.
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McDonalds may want to own some...but, it won't work too well if they tried to own all. Cost would be prohibitive, and lack of motivation....and how do you watch over stores in small towns all over the country.
Sometimes it is better to just farm that part of the business out.
Having said all that, weren't they going to actually have showrooms and sell cars at places like Costco?
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
2018 430i Gran Coupe
Very observant.................agree 100%.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
It could be done just like it's done today - by local store managers reporting to regional managers reporting to ownership. It's not like each McD's is individually owned - it's mid size and large corporate owners that franchise McD's and they have the same sort of management structure. Look at Darden Restaurants - Olive Garden and Red Lobster as well as other chains - over 2100 locations and all are corporate owned. There isn't one franchised location in North America.
Now I'm not saying that's the best way to do it but it is done. IMHO, the automakers aren't interested in running dealerships - they are auto makers, not retailers. They would rather push the inventory risk of finished product, repair parts, facility management, et al down the line.
The down side would be changing the culture of buying a car. Most have said that they don't like the negotiation process. But, would they embrace the "one price" for all structure that manufacturers would put in place? Even if it meant lower prices?
No way of saying. It is often we don't like the current situation, but when face a possibility of change, we suddenly opt for status quo, because it is always better to deal with known s..t than unknown. Plus, parties that have vested interest in maintaining current status quo are usually much more vigilant to fight against the change than those supporting the reforms. They'd scare the pants out of everybody. I can see those ads with ominus music, outlandish claims of prices going up threefold, gazilions of supposed lost jobs and the soft female voiceover "don't let it happen". The organizations with such noble names like "Coalition for low prices" or similar would be behind those ads.
Change is scary for one reason - people develop strategies and skills and networks to deal with current set of circumstances. They are conditioned to think and act certain way. Sweeping change would render those skills useless. Suddenly no feeling of "beating the system" and getting better price than your neighbor. What a void.
2018 430i Gran Coupe