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Duke
Duke MegaDork
8/22/22 11:29 a.m.
Jesse Ransom said:

Name any normal retail purchase where people say "man, I wish this was more like buying a car from a dealership."

If that were the case for anyone but dedicated hagglers, I'd think there was some possibility that we'd miss dealers when they're gone. But it's just not the case. It's a model that most people hate, and mercifully hasn't spread to many other things.

When you buy a house, the seller has an asking price.  You can agree to that asking price right off the bat, or you can offer less and see if they bite.

We typically buy Apple computers and have since the mid-'80s.  Apple does not allow third-party sellers to discount their products below the Apple MSRP.  So we'd shop the free accessory packages between sellers.  I got a lot of free equipment thrown in just for asking.

There are plenty of bigger-ticket commercial items and services that are subject to price negotiation, if you want to.

But you can always pay full advertised price if you don't want to negotiate.

 

Steve_Jones
Steve_Jones Dork
8/22/22 12:20 p.m.
ProDarwin said:
Steve_Jones said:

In reply to ddavidv :

Every vehicle has a price posted. You can decide if it's worth paying, or try to negotiate, but it's right there. Dealers need to post competitive prices online because the competition is on the same web page, yet the first thing 99% of people say walking in is "I know you can do better". At that point the dealer is not playing games, the customer is. People here accept the price Carmax puts online, but not the one the local Ford dealer puts online, why?

The last time I tried to buy a car at the price the dealer put online, the fine print was two miles long and nearly impossible to read on their terrible website.  In order to get that price I would have had to have been at least a former military service member that also graduated from college in the last 6 months.  Borderline predatory practices.

While I was there talking to them about that, I test drove another car.  I liked it, but I didn't pursue it in any way.  They asked me what it would take to get me to leave with that car, and I threw out a number.  They took it.

I didn't walk in demanding better.  I walked in hoping to get the berkeleying price they posted.  Am I happy I got a "deal" on the car I did buy?  No.  I'd much rather there be a posted take it or leave it price, and zero sales people to deal with.

I agree with all of this, but the rules were spelled out.  It is changing though, a lot of manufacturers are mandating you can only advertise a price with rebates that everyone qualifies for, then list "qualified" rebates (military, college) below.  The main issue is if a dealer advertises price X without every rebate and dealer Y has it online with every rebate people get mad at X saying they're a rip off.

SV reX
SV reX MegaDork
8/24/22 7:12 a.m.
mattm said:
MiniDave said:

One guy just wants "the best deal", another just wants a "fair price", but no one knows exactly what those are, do they?

In one case a guy can get in on a special mfr's plan, what would he consider the best deal if he couldn't?

Another says a fair price currently is MSRP, but what will it be in 2 months, and how is that determined?

This is my point, every one wants a "deal", but when everyone starts buying at MSRP from the mfr, will you all be getting "a deal", the "best" deal, or a "fair price" by your own definitions? At that point will you still be able to negotiate? anything? or will you be getting "screwed over" just like you feel you are now?

And still no one has addressed the elephant in the room, what do you do with your trade in?

Someone pointed out that Ford (or any MFR) would rather sell 500 cars a year to 3000 dealerships than 1 car to 1,500,00 people......and you're right. Same goes for trades, no mfr is going to deal with your trade in.

Tesla takes trade ins and so does Rivian.  No reason there needs to be an independent dealer to handle the trades. Tesla, it appears, just sends the cars to auction.

So, Tesla doesn't need dealers, but their model includes selling all their used trade in cars to....

...dealers?

What happens to the Tesla model if there are no dealers?

You're not gonna get dealers out of the equation when it comes to used cars. 

wae
wae PowerDork
8/24/22 7:54 a.m.

In reply to SV reX :

At the risk of starting to sound like the crazy guy who hasn't showered in three presidents standing on the corner screaming that the end is near.... 

I think that the manufacturers see used cars as a problem that they'd like to solve.  Kind of like how the DeBeers people have convinced everyone that the diamond is "forever" but what absolute buffoon would try to give his fiancee a rock that had previous sat atop another finger?

While it may not be some mustache-twirling evil scheme that's been mapped out step-by-step, I think we're seeing signs that the days where you buy your car and own it until you don't want it anymore are numbered.  Once that happens, you really don't need the independent dealers as much.  Sure, the manufacturer doesn't want to deal in the used market as it exists right now, so let the indys - franchise holders with your brand or not - take those trade-ins and auction them to each other and sell them, undercutting your product on price all day every day. 

The first thing that they're doing is trying to get people to purchase their car to order and then have it shipped to their local dealer where they take delivery.  You don't really need an independent dealer to make that happen.  You can have a small(ish) retail location that serves as a place for the truck to unload, hold the car for a week or so until the customer picks it up, and some offices to do the paperwork.  Sure, the trade-ins will come but you can load those up and send them to auction and the used dealers will buy them up.  Maybe you partner with your existing franchise dealers and instead of having them order truckloads of vehicles that are looking for a buyer, they can deal in used cars, get a fee to deliver new cars, sell financial products, and perform service.  Hell, maybe you can even use that as a non-customer-facing location to simply put cars on Carvana-like carriers and deliver directly to the consumer.

Next up, they're working really hard to get into the MRC business.  As a manufacturer, they don't want to have to rely on making a number of new sales every month, they want to have subscriptions with revenue that comes in from the existing customer base every month.  So we get heated seats subscriptions, mandated OnStar (they're probably recognizing that revenue over a period of time as opposed to all at once, if I had to guess.  I'm no CPA or MBA, but if they just wanted people to get used to OnStar, raising the vehicle price by that much would do the trick; I think you have to separate that cost out in order to recognize it as a pre-payment on a recurring monthly revenue item), and it'll continue from there.  They're going to walk consumers in to this regime slowly and easily and let all the rage blow off when it's just heated seats.  But once it's considered "normal" and people just shrug and buy it anyway they'll apply that to pretty much anything they can.

Once we're accustomed to paying our "options subscription" every month, the manufacturers will start telling us that maybe this model or that can't really be "bought" anymore, but it's lease-only with no buyout option.  See also: The GM EV1 as well as more recent news with manufacturers making the process expensive or written out by contract.  That's kind of a waypoint, I think, and it could be a way to handle franchise dealers - you're not really selling new cars like you used to, but you can re-sell or re-lease the captive lease returns.

That'll only last until the manufacturer transitions to a "mobility subscription" model.  Buy a car?  Lease a car?  Oh, no, we don't do that anymore.  You simply pay a monthly fee of $Texas for a set term and you're renting the car from us.  After that term is over, you bring it back and we rent it back out to the next person until the asset is fully depreciated.  Since every feature on the car - I mean, Mobility Device - is subscription-based, all the next customer needs to do is choose which option packages they want added to the base subscription and they can drive it off the lot.  Something breaks?  Well, I'm sure that since you don't own the asset anymore - the manufacturer would hold title, naturally - the provisions of the Magnuson-Moss Warranty Act no longer apply.  You have no right to repair something that you don't own, right?  So now you are responsible for keeping your mobility device in good repair and it must be brought to the manufacturer's facility - maybe they own it, maybe that's what the current franchise dealer transitions to - for any sort of maintenance or service.  Once fully depreciated and no longer worth continuing to rent out, scrap it.

Anyway, that's my tinfoil hat theory.  There's some holes there: what do the books look like if the manufacturer holds that much paper on that many discreet assets that they're renting out?  Does the manufacturer split into a "mobility maker" factory unit and a "subscription management" unit that "buys" the cars from the factory?  How are they going to manage things like registrations on that many cars in that many jurisdictions?  Will people show up with porches and titchforks and run them out of town on a rail when they try that?  I dunno.  But the financial incentive structures that exist right now make doing whatever they can to move to a pure recurring revenue model very attractive.  And, frankly, they don't really need an independent dealer network to sell their cars for them to accomplish that.

ProDarwin
ProDarwin MegaDork
8/24/22 8:32 a.m.
SV reX said:
mattm said:

Tesla takes trade ins and so does Rivian.  No reason there needs to be an independent dealer to handle the trades. Tesla, it appears, just sends the cars to auction.

So, Tesla doesn't need dealers, but their model includes selling all their used trade in cars to....

...dealers?

What happens to the Tesla model if there are no dealers?

You're not gonna get dealers out of the equation when it comes to used cars. 

I think most of this discussion has been about new, manufacturer specific dealerships being a thing of the past.  The used-car game is going to be around forever, even though that experience is even more terrible.

SV reX
SV reX MegaDork
8/24/22 9:24 a.m.
ProDarwin said:
SV reX said:
mattm said:

Tesla takes trade ins and so does Rivian.  No reason there needs to be an independent dealer to handle the trades. Tesla, it appears, just sends the cars to auction.

So, Tesla doesn't need dealers, but their model includes selling all their used trade in cars to....

...dealers?

What happens to the Tesla model if there are no dealers?

You're not gonna get dealers out of the equation when it comes to used cars. 

I think most of this discussion has been about new, manufacturer specific dealerships being a thing of the past.  The used-car game is going to be around forever, even though that experience is even more terrible.

I understand. 
 

That comment was in response to the discussion about used cars being traded in for new ones at new car dealerships. 

SV reX
SV reX MegaDork
8/24/22 9:28 a.m.
wae said:

In reply to SV reX :

At the risk of starting to sound like the crazy guy who hasn't showered in three presidents standing on the corner screaming that the end is near.... 

I think that the manufacturers see used cars as a problem that they'd like to solve.  Kind of like how the DeBeers people have convinced everyone that the diamond is "forever" but what absolute buffoon would try to give his fiancee a rock that had previous sat atop another finger?

While it may not be some mustache-twirling evil scheme that's been mapped out step-by-step, I think we're seeing signs that the days where you buy your car and own it until you don't want it anymore are numbered.  Once that happens, you really don't need the independent dealers as much.  Sure, the manufacturer doesn't want to deal in the used market as it exists right now, so let the indys - franchise holders with your brand or not - take those trade-ins and auction them to each other and sell them, undercutting your product on price all day every day. 

The first thing that they're doing is trying to get people to purchase their car to order and then have it shipped to their local dealer where they take delivery.  You don't really need an independent dealer to make that happen.  You can have a small(ish) retail location that serves as a place for the truck to unload, hold the car for a week or so until the customer picks it up, and some offices to do the paperwork.  Sure, the trade-ins will come but you can load those up and send them to auction and the used dealers will buy them up.  Maybe you partner with your existing franchise dealers and instead of having them order truckloads of vehicles that are looking for a buyer, they can deal in used cars, get a fee to deliver new cars, sell financial products, and perform service.  Hell, maybe you can even use that as a non-customer-facing location to simply put cars on Carvana-like carriers and deliver directly to the consumer.

Next up, they're working really hard to get into the MRC business.  As a manufacturer, they don't want to have to rely on making a number of new sales every month, they want to have subscriptions with revenue that comes in from the existing customer base every month.  So we get heated seats subscriptions, mandated OnStar (they're probably recognizing that revenue over a period of time as opposed to all at once, if I had to guess.  I'm no CPA or MBA, but if they just wanted people to get used to OnStar, raising the vehicle price by that much would do the trick; I think you have to separate that cost out in order to recognize it as a pre-payment on a recurring monthly revenue item), and it'll continue from there.  They're going to walk consumers in to this regime slowly and easily and let all the rage blow off when it's just heated seats.  But once it's considered "normal" and people just shrug and buy it anyway they'll apply that to pretty much anything they can.

Once we're accustomed to paying our "options subscription" every month, the manufacturers will start telling us that maybe this model or that can't really be "bought" anymore, but it's lease-only with no buyout option.  See also: The GM EV1 as well as more recent news with manufacturers making the process expensive or written out by contract.  That's kind of a waypoint, I think, and it could be a way to handle franchise dealers - you're not really selling new cars like you used to, but you can re-sell or re-lease the captive lease returns.

That'll only last until the manufacturer transitions to a "mobility subscription" model.  Buy a car?  Lease a car?  Oh, no, we don't do that anymore.  You simply pay a monthly fee of $Texas for a set term and you're renting the car from us.  After that term is over, you bring it back and we rent it back out to the next person until the asset is fully depreciated.  Since every feature on the car - I mean, Mobility Device - is subscription-based, all the next customer needs to do is choose which option packages they want added to the base subscription and they can drive it off the lot.  Something breaks?  Well, I'm sure that since you don't own the asset anymore - the manufacturer would hold title, naturally - the provisions of the Magnuson-Moss Warranty Act no longer apply.  You have no right to repair something that you don't own, right?  So now you are responsible for keeping your mobility device in good repair and it must be brought to the manufacturer's facility - maybe they own it, maybe that's what the current franchise dealer transitions to - for any sort of maintenance or service.  Once fully depreciated and no longer worth continuing to rent out, scrap it.

Anyway, that's my tinfoil hat theory.  There's some holes there: what do the books look like if the manufacturer holds that much paper on that many discreet assets that they're renting out?  Does the manufacturer split into a "mobility maker" factory unit and a "subscription management" unit that "buys" the cars from the factory?  How are they going to manage things like registrations on that many cars in that many jurisdictions?  Will people show up with porches and titchforks and run them out of town on a rail when they try that?  I dunno.  But the financial incentive structures that exist right now make doing whatever they can to move to a pure recurring revenue model very attractive.  And, frankly, they don't really need an independent dealer network to sell their cars for them to accomplish that.

That's probably a reasonable summary. 
 

I'm glad that by the time it is fully implemented, I'll be dead. 

Peabody
Peabody MegaDork
8/24/22 9:39 a.m.

what absolute buffoon would try to give his fiancee a rock that had previous sat atop another finger?

A smart one

ProDarwin
ProDarwin MegaDork
8/24/22 10:04 a.m.
SV reX said:

I understand. 
 

That comment was in response to the discussion about used cars being traded in for new ones at new car dealerships. 

Ah, copy that.  Dealership isn't needed for trade in though. See also:  Carvana

mattm
mattm GRM+ Memberand Reader
8/24/22 10:18 a.m.
SV reX said:
mattm said:
MiniDave said:

One guy just wants "the best deal", another just wants a "fair price", but no one knows exactly what those are, do they?

In one case a guy can get in on a special mfr's plan, what would he consider the best deal if he couldn't?

Another says a fair price currently is MSRP, but what will it be in 2 months, and how is that determined?

This is my point, every one wants a "deal", but when everyone starts buying at MSRP from the mfr, will you all be getting "a deal", the "best" deal, or a "fair price" by your own definitions? At that point will you still be able to negotiate? anything? or will you be getting "screwed over" just like you feel you are now?

And still no one has addressed the elephant in the room, what do you do with your trade in?

Someone pointed out that Ford (or any MFR) would rather sell 500 cars a year to 3000 dealerships than 1 car to 1,500,00 people......and you're right. Same goes for trades, no mfr is going to deal with your trade in.

Tesla takes trade ins and so does Rivian.  No reason there needs to be an independent dealer to handle the trades. Tesla, it appears, just sends the cars to auction.

So, Tesla doesn't need dealers, but their model includes selling all their used trade in cars to....

...dealers?

What happens to the Tesla model if there are no dealers?

You're not gonna get dealers out of the equation when it comes to used cars. 

I don't think anyone is saying that there won't be used car dealers, just that new car sales could move to the Tesla model.  Used car dealers already have to compete against the likes of Carmax and Carvana, Vroom etc.  They are not protected by outdated pieces of legislation when it comes to selling used cars.  I think people would like to see the same competition afforded to new car sales.  Its not just me, Jim Farley has gone on record saying that dealers increase the cost of Ford vehicles by $2000 compared to Tesla.  When you add that very public statement to the splitting of Ford ICE and EV divisions, if I owned a Ford franchise, I would be a little nervous. 

SV reX
SV reX MegaDork
8/24/22 10:40 a.m.

In reply to mattm :

That's fine. But honestly it's a lot of arguing over nothing. I don't think dealers are going anywhere. 
 

Regarding Tesla... I absolutely disagree that manufacturers could "move to the Tesla model". Tesla was built from the ground up to BE that model. Which is exactly why they can't hit the kinds of production numbers the big boys can. Major manufacturers have 100 or more years invested in being submerged in the manufacturing model. 
 

I don't believe they can make the shift. I believe they will TRY, and that the consumer experience will become a lot worse because of it. 
 

My $0.02

z31maniac
z31maniac MegaDork
8/24/22 5:04 p.m.

As I have said here multiple times, I think it's a case of unrealistic expectations. I think many people go in looking for a fight, then they get one. If you include my ex-wife and my current fiance between new and used vehicles I have purchased 10 different cars over the last 12 years from new and used lots. 

I've only had one bad experience. When we purchased my now fiance's lightly used Honda Fit (we no longer have it and she drives my Mazda 3 while I wait for my '23 BRZ) from a Hyundai dealer here in OKC. It was a horrible, horrible experience. Mainly because they knew we needed to get her out of the breaking down Smart Car she had, and thanks to her ex, her credit wasn't great. At one point, I had to scream at the the finance guy that "No, we don't want the extended warranty, it's an 18 month old Honda with 25k miles on it."

Other than that, I haven't had any bad experiences, and that includes buying 6 new vehicles. I've always found if you're polite, but firm, you'll have a good result. I find that works in most facets of life. 

z31maniac
z31maniac MegaDork
8/24/22 5:10 p.m.

I do have to admit, growing up my dad used to own a car lot, so I probably have a lot more experience with this type of thing than most people. 

frenchyd
frenchyd MegaDork
8/24/22 5:21 p.m.
SV reX said:

In reply to mattm :

That's fine. But honestly it's a hi lot of arguing over nothing. I don't think dealers are going anywhere. 
 

Regarding Tesla... I absolutely disagree that manufacturers could "move to the Tesla model". Tesla was built from the ground up to BE that model. Which is exactly why they can't hit the kinds of production numbers the big boys can. Major manufacturers have 100 or more years invested in being submerged in the manufacturing model. 
 

I don't believe they can make the shift. I believe they will TRY, and that the consumer experience will become a lot worse because of it. 
 

My $0.02

You are most likely right.  I get the impression of Elon Musk  that if things don't go his way he'll keep trying until they do.  
If that means he makes a foolish deal ( like twitter)  so be it.  

codrus (Forum Supporter)
codrus (Forum Supporter) GRM+ Memberand PowerDork
8/24/22 7:26 p.m.
z31maniac said:

Other than that, I haven't had any bad experiences, and that includes buying 6 new vehicles. I've always found if you're polite, but firm, you'll have a good result. I find that works in most facets of life. 

I've had a few bad experiences, although they were mostly in the 1990s.  Perhaps they treat middle-aged men better than young 20-somethings?  Perhaps as I've gotten older and made more money I've been shopping at more upmarket dealers?  Or perhaps the industry as a whole has shifted?

The one outlier to that is when I was shopping for my F-250 a couple years ago, the salesman at the Ford dealer near my house was a slimeball.  After a couple go-rounds with him I jettisoned that dealer and went with another one through the Costco buying program, which was smooth and seamless.

 

Duke
Duke MegaDork
8/24/22 7:46 p.m.

In reply to codrus (Forum Supporter) :

I bought my first new car 30 years ago when I was 27. It was a pretty painless experience and I got a decent deal and good value for my trade-in.

I bought my most recent new car 3 years ago when I was 54. It was a pretty painless experience and I got a slightly less decent deal because it was a unicorn and optioned exactly how I wanted it.

I never traded in any cars after the first one because there usually wasn't much left. I've bought a few used cars from dealers, too.

In pretty much every case the experience was efficient and positive, because I knew what I wanted, what it was worth to me, and I never got anywhere near buying from a dealer I didn't like. I just walked right off the bat and didn't go back.

 

z31maniac
z31maniac MegaDork
8/24/22 11:41 p.m.
codrus (Forum Supporter) said:
z31maniac said:

Other than that, I haven't had any bad experiences, and that includes buying 6 new vehicles. I've always found if you're polite, but firm, you'll have a good result. I find that works in most facets of life. 

I've had a few bad experiences, although they were mostly in the 1990s.  Perhaps they treat middle-aged men better than young 20-somethings?  Perhaps as I've gotten older and made more money I've been shopping at more upmarket dealers?  Or perhaps the industry as a whole has shifted?

The one outlier to that is when I was shopping for my F-250 a couple years ago, the salesman at the Ford dealer near my house was a slimeball.  After a couple go-rounds with him I jettisoned that dealer and went with another one through the Costco buying program, which was smooth and seamless.

 

Possibly? I purchased my first car from a dealer in 2010, I was 28 it was a 2006 350Z. That lasted 3 months before the ex-wife and I went to the Mazda dealer in Tulsa and purchased her a new 2010 Mazda 3 and myself and new 2010 MazdaSpeed 3, and I traded in the 350Z.  

I was 30 when I ordered my '13 Mustang GT Track Pack. I just called the dealer and said, "Call me back with a price for this exact spec that's good enough I won't need to bother calling another dealer and I'll be there 15 minutes after with a deposit." The price was good enough that when I traded it in 7-8 months later with 6500 miles I got in trade what I paid for the car new. 

Once the dealers see you aren't a rube, they don't try to extract every last penny out of you. 

grover
grover GRM+ Memberand Dork
8/25/22 8:41 a.m.

In reply to wae :

This is reasonable and terrifying. Heck, isn't Volvo already doing this? 

Duke
Duke MegaDork
8/25/22 9:33 a.m.

In reply to grover :

It's an available program with Volvo. It was with Cadillac too, but I'm not sure it still is.

 

ProDarwin
ProDarwin MegaDork
8/25/22 10:37 a.m.
grover said:

In reply to wae :

This is reasonable and terrifying. Heck, isn't Volvo already doing this? 

GM had (has?) a car subscription program as well.

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