If what the dealerships do is valuable enough to the customer, they would exist even without the ban on direct sales. But I think we can all intuit that if the ban were lifted, buying a car would be a very different (and better) experience.
If you live in a state of believing that the market is actually fair and others have an equal shot at participating in it, then someone else entering the market in defiance of the existing protections appears to be unfair.
It's hard to believe that you didn't enter into a job market and win a wage fairly. That, instead, you were unfairly advantaged by artificial pressures in that market much bigger and more entrenched than you.
Essentially, the incumbents have been lied to for years and, now that new logistical realities are changing the status quo, it is very hard for them to understand why this is happening. They think someone must be cheating.
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To expand on joosters' analogy of taking a fence down elsewhere in this thread [1], it's not necessarily bad if we take the fence down, we just need to realize that doing so may have serious consequences in the near-term. Having such a strong, deep-rooted artificial pressure in a market so abruptly removed may result in a painful readjustment of the market that hurts a lot of people.
(My other comments weren't meant as a defense of dealers, only intended to elucidate their operations.)
I mention this b/c I don't think it's a gradual accident... The dealers forced Ford to shut down factory stores in Oklahoma not too long ago. This is a turf battle.
I don't think the circumstances are as grim. Most of the personnel retained at a dealership do useful work. That same work will be required regardless of who runs the show. They may need to apply for a job at the new factory store, but that's really the extent of the displacement. You're not eliminating an entire industry. You're re-organizing it to reduce friction.
Markets tend to be efficient in the long-term and inefficient in the short-term as it is still determining how to place capital and whatnot based on new information. I feel like our industry (software, and technology generally) understands that well, even if implicitly. It's just that those "inefficiencies" are often real people and the "short-term" means being unemployed or unemployable for a while.
It's important to innovate and to do so boldly, but to also not be cavalier with how that innovation affects a world that was spinning long before that innovation was conceived of. Not to say that you or anyone else on this thread is doing so, I just wish to point it out.
Would you support laws that would slow down the growth of digital cameras in the late nineties and early noughties so Kodak could continue to sell celluloid? I bet a lot of people were affected by that change. Where is the smooth transition for them?
Personally, I have no interest in protecting businesses. I have an interest in protecting competition. I like the disruption and I like the creating of new value that they bring. I just also feel for the individuals who often are so vigorously disrupted.
The problem I have with the dealerships is that they are saying Tesla can't sell cars directly. This is incredibly stupid. Sure, you could say Ford can't set up a store because that'd be like having a Starbucks corporate store right next door to a franchise they authorized. However, if I wanted to create New Jersey's Best Coffee (don't buy my coffee, although there is Best in the name it will be horrible) I should be able to open my own coffee shop with no regard to whatever agreements there have been about coffee shops before. I mean it is one thing to say that my coffee shop should meet health safety requirements (such as not lacing my coffee with poison) and other sensible requirements such as not selling anything with the label "USDA Organic" unless it is USDA Organic.
> I just also feel for the individuals who often are so vigorously disrupted.
Are you talking about the employees? I feel for the Rite Aid and Duane Reade employees more than I feel for the car salespeople. I honestly believe that successful car salespeople have the qualities that will help them land on their feet in any situation. So they will be alright. We will eventually have to seriously discuss the idea of a universal basic income but that is for another conversation.
For one guy I know this isn't true. He was a very good salesman of [a product], but eventually its economics changed, and after that, he couldn't find a job he wouldn't get fired at. Until car sales. I couldn't tell you why -- he's not a jerk or an idiot -- my best guess is that there's some level of generic "being an employee at a company" behaviors we take for granted (meeting long-term commitments, knowing the product) that just don't happen for him.
"short-term" means being unemployed or unemployable for a while.
The hard truth is that to the degree that these things do work as a simplistic free market model might predict (and that is clearly arguable) they may operate on time scales that will do nothing to alleviate to problems the changes cause.
I was not aware that the industrial revolution caused unemployment that lasted for generations. Can you provide a link for further study of this?
Some people may benefit from this "service", but not me, nor any of the people I know. The only benefit I could see from my previous buying experiences is the act of handing out the key for a test drive. Everything else was simply designed to extract as much money from my pocket without giving me back anything in return. I had all the information I needed to make a purchase decision, the financing doesn't need to be done at the dealership, the car can be bought from a website, and delivered to the curb. A bunch of grown men sitting around all day and swarming people that enter the floor with the goal of "giving them a good deal" is not a value proposition. It's a complete misallocation of resources.
Finally, while you're OK dropping the equivalent of a year's pay on a website, most people are not. They need to talk to someone. So you're still going to need salespeople ... although they'll be far more pleasant to deal with, since there will just be one price that everyone pays and you won't have to be in constant fear of being ripped off.
You're describing a regular garage here. We have those on most corners. Some also sell used cars btw. The argument is centered around the sales activities, hence the comment.
And most dealerships strive to make the service part of the equation very pleasant to keep you coming back. You will get a work area, internet, coffee, snacks, TV, etc. while you wait. Or if you want a loaner, they'll make it happen too. Some even have shuttles that will drive you to the local mall.
Mind you, all of this would still be in place with a factory store, minus the hellish experience of buying a new vehicle.
It seems to be mostly tech workers who pine for the "buy it now" experience for car shopping. They all seem to know exactly what make, model, and color they want, and they never buy used.
Everyone else has a budget, coupled with a wide range of what they consider an acceptable car - which is why test driving and "show me what else is on the lot" will always be a thing.
But if you really can't tell the difference between "people use car dealerships because they all find them more convenient" vs "people use car dealerships because of a law that says they have to buy this way", then you're generalizing too far from the above point.
Which makes me wonder how much it would change the US political landscape to eliminate the massive protections granted to car dealerships.
It would certainly change things a lot, but it would have to happen through the same democratic process that put the protections there in the first place.
The way to get rid of regulatory capture is to make it impossible to enforce and let the leeches die.
Uber may not win, but Taxi companies will die.
Drivers are out in the street protesting anything that allows ride sharing and demanding further restrictions. The idea that employees are innocents is riduculous. This ignores 100+ years of unions, associations, legislation, etc. Its the rank and file demanding these laws, not shadowy men cutting backroom deals. If these deals get made its because the rank and file have a enough political capital to make them happen.
>Essentially, the incumbents have been lied to for years
This seems to be politically biased. These people know exactly what they're doing. When the Chicago Teacher's Union marches and claims low pay (instead they are some of the highest paid teachers in the nation), they know exactly what they are doing. When cab drivers block streets to protest Uber, they know exactly what they are doing.
> ...out in the street protesting...
> ...Chicago Teacher's Union marches...
> ...cab drivers block streets...
Your examples are all of its defense which, while understandable, is largely ignorant of the protections' unintended consequences. My earlier comments addressed the creation of those protections and the effects of their inevitable repeal.
> The idea that employees are innocents is riduculous.
I in no way implied innocence of any party.
> This seems to be politically biased.
Not that it matters, but I am contractually obligated to not display political bias in public. Even without that, as a matter of course and as a non-political resident of Capitol Hill, I avoid politically-biased discussion.
So, are there any aspects of being a car dealer that are worthwhile fences? Offhand, I can't think of any, but that doesn't mean there are none.
I believe the California model actually offers a lot of hope: manufacturers can compete, but they must observe a 10 mile radius from existing franchises.
Why does it take so long and yet being a waiter requires no (government) training at all?
The difference, at least in theory, is that the health inspector prevents the outbreak. Word of mouth is generally more reactionary and after-the-fact.
I recently spent some time on many car companies' websites and navigating the options is extremely difficult. They use all their marketing jargon like sDrive vs. xDrive or 4MATIC or whatever else other nonsense. They don't explain well what any of them mean, and I was left googling the definitions of everything.
Then you get to being actually able to see the car with the various options that you're interested in. The article decries the fact that dealerships have "$100 billion of unsold dealer inventory" but that inventory has a purpose. Some people need a car right away and they aren't picky about it being the exact thing that they want. Some people want to actually see, feel and use the options they are considering.
So I'm against the government-sanctioned ban on direct sales but I think that car dealerships would serve a purpose and survive without it.
For how long? It's a product an older generation that, for some reason or another, appreciates receiving the sales pitch. We're all tech savvy people here; go into Best Buy and start looking at computers. 4 out of 5 times you'll receive a sales pitch with, at least, a few elements of utter bullshit.
Meanwhile, the younger generation are becoming more and more comfortable with buy things online, sight unseen. The GP said it needs to see and feel options on a vehicle. I don't. I need to know what they do, and whether they work (information I can gather from reviews). In my experience, going and playing with something for a brief period of time at a dealership or store doesn't provide enough real world information, and I'm just as likely to make the wrong choice about a feature.
Maybe not, though a lot of people do and you probably should. The ergonomics of a car are more important, and much more complex, than for many other items. Some of this is addressed by adjustable seats, but not all of it. Zappos solved this by doing lots of returns, but that's not a great solution for large items with high shipping costs.
That said, I could easily see the value in having a single specimen at the showroom to check for fit, and then having everybody special order one with their own trim level, colors, etc.
Much more so with cars -- e.g. how would I tell whether 0.5" less elbow space is still good enough, or how good is road visibility from the driver seat (IMO the single most important characteristic of a vehicle!), or whether the plastic feels cheap, or how clear/useful the HUD is, from looking at pictures?
Thinking about it, I've picked my last car based on rear seat headrests obscuring rear visibility too much for my liking in one of the last two contenders. I wouldn't have been able to notice it without actually driving the vehicle.
Sure, there are reviews & ratings, but those reviewers are not you -- if (for example) you don't care about those headrests quite as much as I do, why should you let my opinion skew yours?
Online: You can perform further self-guided research to discern what these terms actually mean and whether you need those features or not. Furthermore, you can see what other people thought about those features.
In Person: You can have the salesperson explain those terms to you. Except... do you really trust someone with a direct financial interest in your purchasing a new car to help you figure out whether you need features and whether this car is the right car for you?
The primary reason to get the dealership out of the picture is, to get the salesperson out of the picture. You don't buy a toaster that way, or even a house. Why a car?
And direct you towards something they have in inventory, not the configuration you came up with on the manufacturers website.
I actually like doing a lot of initial research face-to-face with a person. It's higher bandwidth, and the car is there in front of me, so I can get a sense of the intangibles and other facts that are hard to capture online.
Can you really make that assumption? Customers act selfishly, and game theory applies here.
For example, you try a shoe on in the store and then buy it online for less. The store provided something valuable to you, but you still bought the shoe online. Eventually the store will go out of business if many people do this, and we lose a valuable service because we each act in our own self interest.
It's not hard for me to imagine that protections could be good in some cases.
The only reason I tolerate(d) any interaction with car salesmen at all is the intangibles you get from a test drive. I would much rather just have some kind of option where I can try out car models at some place that doesn't have financial incentive to make me buy one of them.