Ford CEO says EVs will be sold 100% online with nonnegotiable price
usatoday.com
usatoday.com
Here’s the quote with more context: “I believe for retail, we have to -- it's kind of like what happened between Amazon and Target. Target could have gone away, but they didn't. They bolted on an e-commerce platform and then they used their physical store to add groceries and return -- make returns really much easier than Amazon. They used their expertise as a physical retailer to their advantage, but they modernized the e-commerce piece. So it would be really easy to do business with them. It's exactly what we have to do on the retail side. We got to go to non-negotiated price. We've got to go to a 100% online, the vehicle there is no inventory goes directly to the customer, 100% remote pickup and delivery, but then we have this opportunity to use our physical presence, they outperform them. Like, I believe some Mach-E and Lightning customers would love to have a Mustang for the weekend. Maybe they want a Super Duty. I can do that, they can't do that, unless they ran a Ford.”
Source: https://seekingalpha.com/article/4515793-ford-motor-company-...
Once I saw that I got a bit sad.
It is their policy in the contiguous US to price match target.com to Target Store and Target Store to target.com. The policy doesn’t cover Target Store to other Target Store.
https://twitter.com/pluginalberta/status/1531406942119137281
> "We only profit in one way: from new car sales and new car sales alone," Maron said. "We can't ... profit from services because our cars have far less parts than gas-powered cars. There's no regular service visits for engine tune-ups and oil changes. ... We don't make money off financing programs. We don't have insurance products or add-ons. A franchise dealer would look at this and scratch their heads. They would not know how to make money on this model."
> Maron says Tesla is fully committed to its mission of replacing all gas-powered cars with electric vehicles -- a mission auto dealers may not be eager to embrace.
> "We don't simply believe that electric vehicles represent a nice complement to gas-powered cars," Maron said. "We believe it's imperative they are replaced entirely by electric vehicles. ... It would be impossible for traditional dealers to convey this message adequately. This isn't a knock on them, but dealers are not fundamentally committed to the mission of EVs — we are. They make 99% of their revenue off of gas-powered cars. If you're opening a Yankees team store, are you going to ask a lifelong Red Sox fan to manage it?"
https://www.buzzfeednews.com/article/johanabhuiyan/tesla-sla... (2016: 7 Reasons Why Tesla Doesn't Want To Sell Through Dealerships)
> Someone on Twitter recently posted their Model S turning over 400km with only $3k in maintenance costs.
400 kilometers and a $3k maintenance bill somewhat reflects the image of Tesla that you see a lot on the internet. Whether or not that is actually the case.
? LOL
Why not just use megameters? 400Mm
OK, something about that looks odd. But what's the point in SI units if you can't actually use them?
Maybe 250k miles?
That said I had a dealer cuss me out for bringing them a quote from a mechanic for the same clutch replacement. "I can't f**ing cover my dealership like that" as if it was my problem. Same dealer who charged me $2k for a repair when they had the recall letter in their inbox.
Heck, the dealers even have a hard time getting parts.
I'm solving the interim by having 4 vehicles + mass transit + wfh.
Is that, maybe, a little bit ... overkill? Quadruple redundancy, plus a failover, plus reduced demand. Phew!
Citation needed. Both my EVs and ICEs needed similar amount of service. Breakage of drive trains are super rare nowadays (expect for over engineered performance stuff and just broken designs), same as breakages of batteries (cough, Bolt, cough).
All stuff my cars needed a service for in last 20 years were comfort features, gizmos, internal materials, electrical goblins, etc. Both ICEs and EVs.
Transmission fluid for modern cars lasts about 100k miles. So you’ll do it maybe once, unlikely at your dealer as you won’t pay dealer tax for an old beater.
Exactly the same for timing belt and spark plugs.
Drive trains aren’t money makers for dealers for a long time.
The best citation on this site.
this was new to me and the 'to the rock' part didn't make sense to me, so i looked it up.
http://marvin.cs.uidaho.edu/About/quotes.html this page says it's actually this: "Diplomacy is the art of saying 'nice doggy' until you can find a rock."
find a rock as in kill them? :O
The entry level 3 with absolutely nothing on it is $47K before tax. In any case, this specific example was a high end Model S.
For example, with Tesla, the company optimizes delivery numbers of cars sold by sacrificing quality control, and their service center model is anemic and almost an afterthought, especially when it comes to addressing the QC issues their customers experience.
For every Tesla with 400k miles on them with a few thousand dollars in maintenance costs, there are a dozen cars that are delivered to customers like this one[1] from today on r/TeslaLounge, with 17 blatant issues upon delivery that QC should have caught early on in the process. There are stories on that subreddit about customers having to wait months, without a loaner car, for service centers to fix their cars or to even get service centers on the phone about the status of their repairs and cars.
Dealerships act as an intermediary customer that can perform QC, repairs, customization, service, maintenance, reject deliveries etc that manufacturers choose to skimp out on.
[1] https://old.reddit.com/r/TeslaLounge/comments/v3jkn3/update_...
How do you know this? Did you see their internal data? There are lots of anecdotes going around about Tesla's quality. However, with all the TeslaQ it is hard to believe that there is real correlation between anecdotes and data. Here are my anecdotes - I owned 6 Teslas over last several years. Not one of them had any QC issues. I had one service done because I hit tire debris and front break dust shield started making noises. Tesla fixed that for me quickly with no charge. As for the data - during earnings calls they mentioned that they do pay close attention to their customer experience data and they had period of time where service was lagging. But they started addressing this issue and saw improvements. The way they are growing I do believe they need to keep close eye on customer experience, but looks like they understand that themselves and use data to make sure they are on top of this. Unfortunately there's not much reliable independent data to have better understanding of this issue.
Add: The intent of my comment was to ask if parent info is based on specific data or just anecdotes. As an example, I gave my own anecdotes and mentioned that they are not reliable correlation to the data. Somehow the responses I've got are all about anecdotes, mine or others, also some personal judgement of my ability to appreciate cars or judgment of my life circumstances that required me to have these many Teslas. Can we get back to discussing the main point I'm making - do we have data to make any of these judgements?
??????? Why on earth would you need this many Teslas? Maybe if you are buying so many teslas then it makes sense why you don't need them serviced - you barely give them enough time to wear themselves out!
And in general the issues I heard about were from-the-factory issues, so only having the cars for 1-2 years each wouldn't matter much.
And how long of leases are you talking about?
When you trade in your car the dealer will give you an offer for your car. Depending on demand this may be higher or lower than what the lease company wants. When it is higher you win. When it is lower leasing would be better. Either way though, the dealer is pricing in a profit margin from selling your car, so if you don't trade in your car but sell it yourself you can get this profit margin in exchange for your time.
In the end it is about risk management. What will the car be worth in 3 years when you are ready for a new one? Nobody knows for sure 3 years in advance. Sometimes it will be worth a lot more than the lease company expects and so you win, sometimes it will be worth less and so you lose. If you don't trade your car in you probably will always win in monetary terms, though I'm not sure if it is worth the time.
If you live in a state with no sales tax, then you avoid this problem.
the reason is that tesla price increases and backlog creates added value for aftermarket teslas.
As it happens, I can sell the used car i purchased over a year ago for more than i originally paid.
Still, it probably would have been more profitable to keep driving just 1 Tesla, and sell the other Teslas as essentially new as soon as you got them.
Isn't this also terrible for the environment? The resources it takes to make one car is a lot.
Same in my experience, though it's not as extensive as yours.
It's surprising how often you see negative anecdotes about quality control amplified as representative of a larger trend. It often seems there is an agenda compelling many to work so hard circulating negative opinions.
There are definitely some disgruntled customers, too.
I think a lot of the contrary voices are people scarred by ICE experiences and searching for comparable "gotcha boogeyman" to EV's to satisfy themselves with their current car situation, whatever it is.
Which is really true for pretty much everyone in this argument on both sides.
Overall I guess the point I want to make is even thought it is rent seeking (many industries are) this one seems to provide for so many communities all across America. I find it hard to believe that ford will pass up the savings to the consumers. We all know that profits will be returned to shareholders.
how dare they sell that vehicle.
Not to mention that when they bought it, Tesla gave the buyer the opportunity to reject it and have another specimen manufactured at no cost. they decided to keep it because it appears their vanity is literally only skin deep.
And you make a great point about the importance of rejecting deliveries, which is exactly what a dealership would have done upon inspection instead of forcing layman retail customers to do it free and to their detriment. We even have Tesla customers asking why other customers choose to take deliveries at the end of the fiscal quarter[12], because Tesla has a reputation of pushing out as many vehicles as they can in order to boost delivery numbers, even if that means delivering cars in poor condition. When quality and service is consistently that bad, you can't blame the customer for accepting a delivery of the car they spent tens to hundreds of thousands of dollars on.
Also, your comment goes against HN guidelines[13]:
> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
> Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
[1] https://old.reddit.com/r/TeslaLounge/comments/u9v1mo/off_my_...
[2] https://old.reddit.com/r/RealTesla/comments/rqie4g/gotta_lov...
[3] https://twitter.com/aprildawn78/status/1481450029462212616?s...
[4] https://old.reddit.com/r/RealTesla/comments/nurlbg/my_model_...
[5] https://old.reddit.com/r/RealTesla/comments/qzr5tx/how_is_th...
[6] https://teslamotorsclub.com/tmc/threads/comically-poor-deliv...
[7] https://teslamotorsclub.com/tmc/threads/my-first-model-3-exp...
[8] https://teslamotorsclub.com/tmc/threads/took-delivery-today-...
[9] https://old.reddit.com/r/TeslaLounge/comments/j59ovh/so_tesl...
[10] https://old.reddit.com/r/TeslaLounge/comments/smettt/terrify...
[11] https://old.reddit.com/r/TeslaLounge/comments/l0ownx/my_y_ha...
[12] https://old.reddit.com/r/RealTesla/comments/j59dp1/tesla_own...
This is my first time in 12 years on HN that mild sarcasm has been treated as confrontational. I hope you are okay.
You need an actually random sampling of delivered Teslas to determine how extensive QC issues are and whether the average one can go 400k km with only $3k servicing. Also, they defects reputed to vary substantially over time (e.g. one model year might have 5x the rate of two years later).
Brakes? Maybe you're cutting out one or two pad slaps in that 100k.
Oil changes? Yeah, you've eliminated those, the lowest margin service dealers do.
Suspension components, air conditioning, etc? No difference, and that stuff shouldn't need to be touched in the first 100k anyway.
Tires? BEVs eat tires.
Still need wiper blades, cabin filters, etc. But those aren't big items either way.
I guess I just don't see where all this recurring service revenue comes from. Cars just don't break until they're 10-15 years old. Maybe some cars are really that unreliable still?
That's excluding tires, wiper blades and air filter changes.
Owners of less reliable ICE cars probably spend more.
I have two vehicles over 100k, one closing in on 200k soon, and my maintenance on both is less than 5k.
Of course, the part no one talks about:
1. How will you do a family vacation beyond the EV range?
2. Who pays to replace the ~$15k battery and when?
Stopping for a meal, bathroom, and stretch break every 300 miles or so?
> Who pays to replace the ~$15k battery and when?
I'd typically buy a new ICE car before the 400k kilometers cited, as repair costs accelerate, so this isn't really a significant difference.
With a 300 mile range, I'd need at least 2 stops that are 4-6 hours, unless if I find a super rapid charger. That turns a sucky 12 hour day with 1-2 hours of stops into a 16 hour trip with probably 1-2 hours of additional stops still.
So now I need to power through or get a hotel.
There's already a pretty extensive network of rapid chargers, and it's growing all the time.
My understanding is that you were stuck with the charging network that each manufacturer is making.
The only people I know who only stop to refuel and then carry on until they've basically driven 12 hours straight are just trying to flex, it's some masculine thing.
More and more vehicles are getting 100-150kW charging, which definitely pushes a full charge more into the 25-40 minutes range for 80kWh EVs.
I wonder if having smaller cars would help as well, American cars/"trucks" always seem so pointlessly oversized. If the number of single occupant trips in London in things like Minis makes me sad, then I don't even want to think about single occupant trips in F150s in America.
Are you seriously resorting to a manphobic ad hominem attack at someone's masculinity for simply pointing out stopping for 4-6 hours every 4-6 hours of driving obviously doubles trip time, and would require those who are trying to save money on flying, but not wanting to waste a half-week driving to the beach or a vacation spot is obviously because that person is on some sort of bench pressing flex thing?
Perhaps you forget the US is 40x bigger than Great Britain, so obviously what works for the majority of those in Britain (e.g. 300 miles) may not cleanly translate to other countries. I'm not telling you to not get an EV. It might work perfectly for you. But as of yet, all those advocating for it and blaming the problems of the world on ICEs still hasn't addressed the basic concerns many people still have about EVs.
Tell me your a condescending narcissist without telling me your a condescending narcissist again.
We can only draw comparisons from our own experiences and the majority of people I know do not drive such long distances, the ones I do know make a point of stressing the fact that they do not stop whenever I have gone on a long journey with them.
I haven't forgotten the relative size of the US, but the same applies to any country of relative size. I guess it begs the question of _why_ you all drive so far. Does land mass correlate to miles driven? Is it because of an emphasis of road infrastructure over public transport/rail? Hmmm
My observation is that it depends on the brand of the car. If it's a Toyota or Honda, or other well to do brand that people with credit scores reminiscent of FDA minimum cooking temperatures cannot afford it's the owner's fault that the timing belt snapped at exactly six miles more than the recommended change interval, they should have got it done proactively.
If it's a Nissan, GM or <clutches pearls> Chrysler then it's obviously the car's fault that it needs a fair number of suspension parts after spending 120k being fully sent over rural gravel roads with 300lb of tools in the trunk.
This pattern of double standards that absolves "things that should be nice" from blame when they fail to meet those expectations and blames more modest products even when their failures are reasonable can be seen across many classes of products, not just cars.
People like to talk about mileage because it’s an easy-to-measure stand in for the age of a car based on its usage. But over time they forget that like in humans, there’s a lot of variation at the same age.
There’s other factors like road conditions, cost of parts, cost of labor in different parts of the country, unexpected events like fender benders, etc. that the mileage number doesn’t capture.
The same 100k mile car driven in a leafy suburb where not much goes on is going to be different from a car with the same mileage driven under harsher conditions.
Scotty Killer on YouTube said something slightly different. He said highway miles are almost one tenth of city miles. Or in other words, stop and go traffic is ten times as bad as constant driving without traffic. At least for the engine and the transmission I guess.
If there are problems, it'll be $170/hour plus parts...
A lot of people just do what the computer says and take it to the dealer. The workshop is always full... it has about 20 bays.
That's a lot of income for the dealership. If you drive a lot it'll be more than one a year...
I do as much maintenance as I can myself. If it's something I cannot manage (last year I had a split hose on the transmission radiator line) I take it to an independent shop.
US big 3 or German cars are a maintenance nightmare.
Other than normal fluid changes, I can count on 1 hand the number of repairs I have had to do on any of them.
Electric devices require significantly more servicing than mechanical ones. On the flip side, people seem content to treat electric devices like they're disposable and just buy a new one every year.
I don't think this dynamic won't hold for larger-sized EV's.
Sounds like a Toyota
Their role is to collect orders, provide test rides and service the cars.
I wouldn't cry for nor count the dealers out just yet.
I don't know if that's right (anybody with more info care to comment?), but it's at least enough to give me pause on the "dealers will hate nonnegotiable pricing" claim.
You are correct that there is no real money in new car sales anymore.
Previously I could never sweet talk dealers into the kind of deals some of my mates could.
The Tesla model is such an improvement.
If banking and Everything else is a good example, people are getting used to buy online.
I bought even my current car without seeing it before.
I bought my bike online as well.
If more and more do that dealerships might loose too much revenue anyway to keep them afloat.
How does it ‘read too much into it’? He literally says they need to go to a 100% online order, no inventory, no negotiation sales model. That’s a HUGE a change from today.
John Deere (the company I work for) works this way: everything is just in time, if you want a new tractor you order it and get it 3-12 months later. You still have to order from a dealer. Dealers do not keep new tractors on the lot, except for demo units and service loaners.
I'm not sure how this will work for Ford though. Deere is selling to businesses, a new tractor is a financial decision talked over with the accountant, and are bought/traded in based on tax deductions (the date you place the order counts for ta purposes not the day you take delivery). Cars seem like more of an impulse purchase and so people want to go to the dealer and drive a new car off the lot. Dealers (and Ford) doesn't want to risk someone buying a car and then changing their mind, which is a lot more likely to happen if you don't have the car yet. Even for Deere, dealers normally keep new small tractors on the lot.
Nowhere in that does he say outright where dealers fit into an online, fixed price world. He only makes super vague statements like "dealers will be more specialized."
Reads to me like Jim isn't planning on dealers being around in the future but he's being vague enough to try not pissing the dealers off in the near-term.
Tesla has pretty convincingly demonstrated that it's possible to run a car company in the US without paying off the dealerships. It's only going to be easier for the second mover here to also stop.
I know this is off-topic, but the easiest return I ever made was an amazon return. I went through the return process on amazon's website and was given a QR code which took a few mins. I drove to the nearest Kohls, walked to the amazon kiosk, showed the QR code to the employee, and handed over the return. Took all of 30 seconds in store.
Anyway, back on topic. A hybrid model makes sense for Ford to compete, and it is a lot like Best Buy/Target in many respects. However dealers have made a living for a long time being the middle-men, I wonder how they will deal with additional competition. Best buy has a problem where people look at the product at the store then end up buying online, I could see people taking test drives and then ordering from the Ford website. Although I think the dealer will arrange commission if that happens.
I would love to see the behind-the-scenes numbers crunched on that model. I don't see how that model works long-term unless the percentage of customers in the showroom walking out the door with online price-matched goods is a relatively small group, or they're successful up- and cross-selling on gonzo margin goods and services before and after they walk out the door, or their COGS is way better, or some other activity to make up their bigger overheads versus an e-commerce marketplace.
Can anyone offer any insight how BestBuy is long-term sustainable with the online price matching policy?
Long term sustainable simply because they've already baked it in and it's less widely known amongst the typical consumer and its honestly kind of a hassle, people pay for convenience.
And for many of their products they all sell at MSRP anyway (apple laptops say) so they’re already matching Amazon et Al. And things like hdmi cables are some off brand and so they don’t price match anyway.
They have a pretty slick setup going, also jumped in on the appliances market just as Sears et Al disappeared.
I've bought more from Best Buy in the past few years than I have in the decade before because they are often the cheapest option, including Amazon. They also offer same-day courier service on some things I've ordered.
Well sure. That’s because they have enough money to just toss whatever you returned in a landfill.
You got your money back, and we all pay in environmental damage.
Ford announced 3 months ago that they were forming a new corporation, Ford Blue, whose purpose is to skirt state dealership laws in order to lawfully sell these EVs direct to consumers. So this is definitely not just a comment.
https://www.freep.com/story/money/cars/ford/2022/03/02/ford-...
The OEMs want to us EVs to finally dump the dealerships.
Notably, Ford has explicitly said they’re not doing that: “We’re not keeping dealers in the mix 'for the moment.' We are betting on dealers for the long term. I want to make that really clear. I’m not mincing words. We will have new standards and a new experience. But we learned a lot by watching Tesla."
Maybe going direct is the secret plan, but I don’t see how they get there.
Yeah, the dealership and the state level dealership associations aren't going to go out of business without some good fight. Even though I personally don't like the markup to be paid at the dealerships, but they exist for some good reasons: educate the consumers, financing, DMV paperwork and most importantly service your vehicles. EVs need much less service visits but when they do - it's likely harder for DIYers to tinkle with High Voltage battery systems and/or the infotainment firmware diagnostics and updates.
Every dealership I've been to has been more interested in feeding me whatever line of crap they think will get me to buy a car, not actually educating me about the different products available.
>> financing, DMV paperwork
Tesla and Carvana have proven these can be taken care of without a third party dealership. In most cases, financing is provided by a bank or credit union, not the dealership itself
>> and most importantly service your vehicles
Unless the fix is covered by warranty, I'm not taking my car anywhere near a dealership. They charge considerably more money than my trusted mechanic. My Hyundai dealership wanted $125 just for an oil change on a 2013 Sonata.
In theory, a dealership could be good for all of these things. In practice though, they suck. There is a reason most people hate car dealerships.
I have a recall repair on the car as well so I think my final move is to use that as leverage to push the price down further. Getting the repair done by the dealer gets you a warranty by the manufacturer, which is the only additional value that I see.
I don't get it. "Required" by whom?
Just say no, negotiate a better price, or take the car elsewhere.
>Getting the repair done by the dealer gets you a warranty by the manufacturer, which is the only additional value that I see.
No, the warranty exists regardless of where the car is serviced.
I'm not sure if that's true for Ford, but this is in the owner's manual for the Nissan GT-R.
> OBTAINING WARRANTY SERVICE
> You must take the vehicle to an authorized Nissan GT-R Certified dealer in the United States or Canada during regular business hours at your expense in order to obtain warranty service.
> WHAT IS NOT COVERED
> Repairs performed by anyone other than a Nissan GT-R certified dealer.
See the section titled "OBTAINING WARRANTY SERVICE" on page 11 and "GENERAL EXCLUSIONS" on page 12. https://www.nissanusa.com/content/dam/Nissan/us/manuals-and-...
> Repairs performed by anyone other than a Nissan GT-R certified dealer.
IANAL, but I don't think that clause is legal in the US. Any equipment originally covered by a warranty and still within the time/mileage limits of the warranty must still be covered unless Nissan can prove that the work done by an outside tech was the cause of failure.
I really, really don't understand why the model won't die. I'm guessing regulatory malfeasance.
It may be aggressive lobbying that keeps this status quo long past the original intent, but the original compromise came from a good place (eliminating "lemon dealers" and "lemon manufacturers" that refused to provide service/support/recalls).
Ah yes, Carvana, the company who has had its dealer license revoked in multiple States for a variety of violations, whose stock is down 90% (while insiders cashed out) and laid off thousands of people. What have they "proven"?
The difference is that the customer experience seems to be radically different in Europe. I have no bad things to say about the dealership I had to deal with. They mostly sell at MSRP. They will gladly order you a customised model from their online platform if you need something specific and don’t mind the delay. You will have to negotiate the price if you want them to take back your old car but that’s mostly done in a very professional manner. Even buying used is generally quite pleasant. You will not get swindled at an official dealership. Meanwhile the US seems extremely cutthroat.
This seems completely contrary to my experience. How on earth do you get swindled? Know the price of the car you want, refuse to pay more; you are the customer, they need to make a sale. Dealerships are abundant in most cities and compete hard with each other. There are always deals to be had.
Why do so many people here find this difficult? Salesmen are usually dying to sell you a car, and never want to see you walk out.
A car handle on a Tesla that needs replacing is $1,000.
A decent right to repair would cover most of these kind of things
Tesla wants to be the new BMW and at least in US car sales today is the new BMW.
I bought a new car direct and I was educated, my credit union was better than the manufacturer's financing offer, the manufacturer did DMV paperwork, and the manufacturer does service.
9 years ago.
What am I missing?
A useless middleman.
For long stretches of time most manufacturers were offering 0% financing. Tough to beat that.
On a higher price. If you took a discount that could not be combined with the 0 percent financing, and financed using traditional financing options, you ended up paying less money.
The last two cars I bought the salesperson knew nothing about the cars. People can learn much more about cars by going to a web site than talking to a sales person.
- DMV Paperwork
Dealerships charge consumers for the privilege of submitting DMV paperwork. This could all be handled online. Don’t understand the benefit.
- service your vehicle
I go to independent mechanics. They service my vehicle just fine.
Dealerships have got to go. They’re a huge waste of time space and money. They reflect crony capitalism at its worst.
I see value in having a local showroom where prospective buyers can test-drive several models to evaluate their driving experience. I don't think I'd ever buy a car without being able to sit in it beforehand.
Imagine manufacturers buying out the dealership lots, turning a good portion of the lot to a small track for testing the cars handling, maneuvering, and acceleration without going onto public roads. I'm assuming a closed course will be much better for their insurance than going onto public roads and much more fun for customers since they'll (presumably) have straightaways and corners. And the fact that they could just keep a model car for each trim level for their line up might incentivize them to not be stingy on test drives (and when the car is past a certain point they sell it at a discount).
Another portion could be turned into electric charging stations using solar. With how many dealerships there are I think this is a neat use of the wasted lot space.
So all in all, you then would go check out the cars, order the car you want online, and then pick it up on arrival at the showroom, all while doing away with the haggling and downright scummy tactics dealers currently use. The fact they default to screwing unwitting customers over should be warning enough that there needs to be change.
I have yet to find to a situation where the overall direction of education flow was from the dealership salesperson to me.
That effect was significantly magnified when I was shopping for, and ultimately purchased, an EV. The only thing I can recall the salesperson knew more about that car than I did was where the dealership kept the keys.
For used car purchases that’s a different story I guess. Maybe dealerships only exist to service cars and sell used ones.
Shrug.
> "It's going to be much more efficient, a lot more online. It's going to be a really different model."[1]
Obviously this will be very controversial and subject to interference by state legislators who have often protected dealerships. Will be interesting to see this transition.
https://insideevs.com/news/571959/ford-dealerships-impacted-...
State legislatures and courts have been smacking down this kind of shenanigan for nearly a century now.
Personally, I think theres ~50% chance Ford will have to split into two companies (separate stock ticker etc.) to be allowed to have an EV only, no-dealership, sales model,
Telsa insisted on it's direct sales model and it was more politically expedient for regulators in many states to carve out an exception to the dealership requirement only for car companies that sell EV's exclusively (only tesla at the time).
While I suppose this didn't seem like a huge threat to the car dealership lobby in each state at the time it's clearly come back to bite them and is the main reason Fords Electric vehicle production and distribution is a different 'car company' on paper, so that they can take advantage of legislation designed for tesla.
Back in the 1930s, the car companies established this system so that they could worry about making cars, and the franchises could worry about selling and repairing them.
Early on, though, the franchisees lobbied their state governments for protection. They feared, among other things, that the giant car companies could open up their own stores across the street, cut prices, and crush the franchise like a bug.
To prevent that kind of abuse, all 50 states passed “dealer franchise laws.” They protected the dealerships in various ways—including barring any car maker from selling directly to consumers.
Those laws didn’t foresee the modern era. What they meant, of course, is that “no car company that has franchises can sell directly to consumers.”
They weren’t even thinking about companies that don’t have franchises, because there weren’t any at the time.
Over the years, Tesla’s legal team has gone from one state legislature to another, pointing out how that rule has become outdated, and suggesting that it get changed. In some cases, they succeeded.
In others, though, Tesla is running into a tougher obstacle.
Why? They want to protect that recurring service bay revenue. Oil changes, plugs, belts, etc.
All of the other components still need maintenance. Tires, alignment, suspension etc.
While driving there is no engine noise, no unpredictable or delayed acceleration, no need to visit a gas station and have gas drip down the side of the car, and the knowledge that the drivetrain is simple and reliable and isn’t saturated with petroleum products.
I’ve owned some very nice BMWs before the Y, and while I greatly miss the suspension performance I can’t imagine going back to ICE.
The best description of my experience switching to an EV is that it’s been like going from a VCR straight to streaming. It’s fast, convenient, modern, and doesn’t really degrade.
I'm not saying the EV's are not theoretically more durable and (much) less maintainance-intensive. I am saying that the best of the best ICE vehicles are not as different as your observation about your own TM3 tries to suggest.
https://www.normreeveshuntingtonbeach.com/honda-fit-maintena...
Well, theoretically yes. The point is that saying "my TM3 has 25k miles and zero maintainance" is worse than anecdata. It's no better than saying "My Fit has had almost zero maintainance at 164k miles". Far better to list the parts and systems not found in an EV, possibly along with likely maintanance schedules.
The spark plugs on the Fit are likely failing right now, btw.
This isn't true. Tesla batteries are liquid cooled. When supercharging, you can hear the fan blowing on the radiator.
My spouse and I recently purchased an extremely difficult to find plug-in hybrid EV. We had placed a hold on a specific vehicle destined for delivery to the dealership a few months later. We paid a deposit and signed a receipt that made reference to that vehicle and was given the final price sheet for that specific vehicle at deposit time.
Two days before we were scheduled to pick it up (more than two months after we put the deposit down) the sales guy called and said that the dealership had instituted a new policy on the first of the month that no sales of that specific model and trim level would be authorized by the deal desk without an interior and exterior water resistant coating, and that the lowest price he could offer was an additional $2,500.
As you can imagine that did not stand up to scrutiny and we walked out of there with the vehicle at the total price recorded in the initial paperwork. They signed on the dotted line and never said a word about any new policies until we were ready to pick it up. They did this in a U.S. state where that practice is not legal.
You bet we told Toyota about that when they sent the survey.
If they weren’t making enough to meet their needs then they should have known that when they were negotiating.
In the past decade we've had one new ICE car and two new EV cars.
The ICE car has been in the dealer once for a couple hours to replace rear hatch support struts (nothing to do with the engine, so could happen to any EV that has a hatch).
The EV cars have spent many weeks in the dealer for repairs and waiting for parts. Also issues unrelated to the engine, this was for door lock problems and window regulator problems.
In theory the EV motor is simpler than the ICE engine. But in practice, the ICE engines are bulletproof and almost never have problems. In 36 years of owning cars, I've never had a car in a shop (or dealer) for engine issues. It's always electrical system, electronics, seats, windows, shocks, etc. Components that both ICE and EV cars share.
They could have leveraged their large stores to be showrooms / distribution hubs (that they mostly already owned, which is why the private equity people were so interested in them, due to their real estate holdings). You visit a sears, you see what you want, you order it and in a couple of days you come back to pick it up. Their logistics pricing should be cheaper than what amazon could have done (as they are skipping last mile), and for many consumers it wouldn't have made much of a difference (the sears that was local to me growing up was in the same general shopping center as the groccery store we generally went to, so we were regularly there).
Of course they did try to do "in store pickup", but this was when they were dying already and the experience was pretty terrible (i still used it a bunch back in the day as at one point they were basically paying us to shop at sears via the amount of free shop your way points they were giving out).
Why would anyone want that? If I’m going to go so much as 15 minutes out of my way, I expect to leave with the item in my hand that day. That’s the killer advantage for brick and mortar retail.
I don’t even want to go to the store the first time, but I sure as hell don’t want to go twice if Amazon offers the same overall latency with zero trips to the store.
I feel like the wilder "DNA fight" that wasn't was "80's Sears/Amazon wannabe": Service Merchandise. They tried to recreate the Sears formula for the late 1980s/early 1990s and basically convergently evolved the Ikea model before Ikea grew any US presence as just big warehouses with smaller showrooms up front. They made a bunch of silly mistakes in the 90s trying to grow beyond their roots in primarily the US South region to more national regard/footprint, but if they hadn't made those mistakes they probably could have been a real interesting contender against Amazon.
That being said, is there any counterpoint to this view? Are there any benefits that dealerships offer today over direct sales? What would we lose if we got rid of every dealership? If there is truly little or no advantage, why has this obvious disruption never come up in the last ~100+ years of car sales in this country and all over the world?
Once you break it down, dealerships not a combination of businesses that really needs to be together, IMO.
I'm guessing this is less true today than in years past.
edit: I can see from the two other comments here alongside mine that this is a common observation.
People HATE dealerships. They make a very fun purchase a very unfun purchase.
Very few people actually want to wait weeks or months for the car. HN doesn't believe that, because we're tilted towards Tesla fans who are inclined to be okay with this. Average Joe will put up with a few hours at the dealer to get their new ride today.
Not likely due to consumer preference, as its a given that dealership and buying experience is often hated by the consumer. look at this thread, talk to friends,and search the internet. Sure its anecdotal but its appears to be pretty consistent across the board despite not being a scientific survey.
Heck even carmax created their business model around how the consumer hates the buying process and even though carmax often charges more in the $2.5K - $4K range than what you can negotiate elsewhere they are still around.
Its more that they (the dealership) has a very strong lobbying influence and have rigged the market in their favor where the consumer has to take it. Like making themselves a forced middleman.
kind of how comcast is often rated among its own customer at the top of the most hated company list year after year ,yet they stay in business.
Health care in the US comes to mind. Is it beneficial? Yes. Are the prices marked up beyond insanity through bad incentives and rent-seeking? Also, yes.
It's not an either or.
I'm now convinced it is a bad idea. But I don't see it being good for local at all.
So I agree with the other commentor, they exist to extract local money, to make a few locals rich, the manufacturer's piece of the pie is whatever they think they can charge either way. If you cut out dealerships you make prices less obscure and force manufacturers to compete more closely with one another, and also save the middleman rent-seeking.
Cars are odd. Shipping is not cheap on them. And will never be cheap. If there is not some contractual obligation to ship inventory closer to consumers, I see little reason to think prices won't go up in a market that is dominated by direct sales.
Making money on the back through financing or upsells is normal.
Fun times for all.
I'm game for how this week help local folks, though. My gut is it will just be fewer rich people at the very top of these companies.
Owning a car sales franchise is one of the best forms of rent-seeking, thanks to state and federal laws protecting car dealers.
Yugoslavia was just falling apart - the entire country went from planned limited production to open market. My family was importing cars from other countries as this started. The demand was so great, that when the truck with cars stopped on a parking lot at his home, people would come running putting their "reserved" stickers on cars. Everyday he did a trip out of the country and back. "Sold" all cars before he had a chance to step outside a truck.
This lasted for sometime, giving him enough bankroll to open car dealership. Not sure how exactly it happened, but few years later it became Ford dealership and still is.
1. A national dealership network is at minimum, a soft-guarantee that your car can be maintained/recalled/fixed without you jumping through hoops.
Unfortunately, that soft-guarantee is saddled with all the other baggage of car dealerships. Pushy sales-people, extended warranties, predatory loans, etc.
2. It forces you to buy local, so not all the money flows out of your community, and into Detroit - some of it stays to circulate in your town.
3. People want to sell/trade their cars in, and Craigslist can be a pain in the ass.
4. People like to test-drive cars. People really like to test-drive used cars. See point #3. By the time Tesla starts holding used car inventories[1], and lets local buyers test-drive them[2], their 'showroom' starts looking less like an innovation, and more like a non-franchised dealership, where instead of the franchise owner skimming profit off the top, it just goes up the food chain, directly to corporate.
[1] Which they are.
[2] Which they do.
In recent years there has been meaningful investment and growth in Detroit [0], but a lot of auto money is in surrounding areas like Grosse Pointe [2] and Oakland county [1].
[0]: https://fred.stlouisfed.org/series/DETR826PCPI
[1]: https://en.m.wikipedia.org/wiki/List_of_Michigan_locations_b...
[2]: https://en.m.wikipedia.org/wiki/Grosse_Pointe,_Michigan
Edit: mentioned Grosse Pointe
I think this is a kind of ‘broken window’ fallacy - ie unless there is a genuine service being offered then it’s kind of like requiring gardeners to use toe-clippers (ie the local economy are paying extra to hire people to do basically nothing).
> 3. People want to sell/trade their cars in, and Craigslist can be a pain in the ass.
Tesla offers a trade-in program so that appears to be similar in some respects?
I'm not going to argue with you as to whether or not the theory behind it is correct (my feelings on the subject are complicated), but I will point out that there's a major political movement in this country to 'keep it local', that has varying degrees of support in varying levels of government. Regardless of whether or not this desire is correct, whether its organic, or whether its simply manufactured through propaganda - it's present, and it gets acted upon.
> Tesla offers a trade-in program so that appears to be similar in some respects?
Which I address in point #4 - at the point where they start doing a major amount of business in trade-ins, they start looking like... A corporate-owned dealership, as opposed to a franchised one. A lot of the cost savings of 'show room-only' stores go away when you start having to deal with used inventory, scheduling test-drives, fixing cars in your dealership garage, etc.
Obviously, when they were first getting started, their used market was tiny, and none of those business needs/costs were present. But as their cars age/if they ever manage to successfully sell more models/if they somehow manage to capture a major chunk of the overall auto market, their 'stores' will have to offer pretty much every service that a traditional dealership does.
the only thing I can think to say is that they are still a convenient repair facility, Tesla is fairly notorious for slow turn-around for repair.[0]
I think a nice middle-ground would be the conversion of dealerships into showrooms/receiving-centers/repair facilities -- oust the sales portion and highly regulate the repair pricing. Faster repair times while getting rid of most of the scummy parts of the car dealership experience.
[0]: https://www.teslaownersonline.com/threads/model-3-significan...
if your driving a newer car, theyll handle warrenty work, recalls, service packages that your car came with.
Everyone is having parts Problems, it's the scaling that Tesla still needs to do.
"Because they're scaling up". They've been making vehicles for 14 years, how much more time do they get to realize they should have a parts network?
The Soviet Union's automotive industry operated in this exact manner. It's why, when by some miracle you got your hands on a car, sourcing replacement parts was nigh-impossible.
> ... how much more time do they get to realize they should have a parts network?
It took them ~60 years, give or take.
Sometimes they’re even worth using for “normal” repairs because they will sometimes bill by the book even if the actual labor time is higher.
This is exactly correct. Which is why if you aren’t sure, compare prices with your preferred mechanic first. Where I am, the best independent mechanics and shops charge more than the dealer, for various reasons.
My experience is that independents are significantly cheaper on a like-for-like basis, are also more willing to do a workable partial or alternate repair, but have worse lounges and often no courtesy car. (So you’re getting something for the extra cost.)
The closer the person who does the work is to being the person who writes the bill the closer you get to clock time in my experience.
https://www.liveabout.com/the-truth-about-flat-rate-car-repa...
Many mechanics aren’t really directly employees of the shop, and often get paid based on work they get (some even have to “rent” the stall). It can be an interesting industry.
It’s entirely dependent on the market and region. Sometimes it is cheaper to go to the dealer depending on make and model. It also depends on where you live and the availability of mechanics and parts.
If Ford is deliberately bypassing their dealerships for sales, then I would expect the repair service provided by dealerships to be even worse than normal, since they have no motivation to make you a repeat customer. And if not the dealership, where will I have the truck serviced?
If you drive a Ford, sure, it needs a lot of service. Which is why I stopped buying Ford. Toyota and Honda don’t need much service, and I don’t see how they are money makers for the dealer. And when you move to EV, you need even less service than before since the is no ICE to maintain.
Well first off, people like buy that marketing stuff hook line and sinker, so they make more on the sale. Second, pretty much any vehicle that rolls on earths surface is going to need stuff serviced in proportion to how close it is to the ground. For cars this means the dealer can make plenty of money selling brake pads, wheel bearings, suspension bushings, tie rods, and other wear items like that (and the labor to swap them out).
Pretty much everything made in the last 30yr lasts as long as you're willing to keep doing the normal scheduled maintenance and keep feeding it wear parts. The average Toyota buyer is a lot more willing and financially capable of doing that than the kind of person who rolls negative equity on an Altima into a Dodge Journey.
I used to be responsible for a fleet of delivery vans. I would have no qualms about buying Ford.
Go look at the list of most reliable cars. Toyota and Honda are always listed as number one and two. Ford isn’t ever discussed as "reliable". I think this goes way beyond perception. Yes, commercial vehicles by Ford are probably reliable, but we are talking about regular commuter cars, and when it comes to that class, Toyota and Honda lead.
And commercial vehicles live in a different world where companies actually track TCO and friends.
The Transit and the Sprinter (the latter of which has really gone down the tubes since it's '00s peak) might be "good" but that's like being MVP in a junior varsity game. Anyone operating them outside of warranty generally hates them compared to the Ford and Chevy vans they're replacing.
I’m sorry, but this statement is so utterly and totally opposed to the facts, that I’m beginning to think you’re doing PR for Ford. The demand for Euro-Vans in North America is so high, there’s a 1-2 year waiting list. It’s literally the most wanted vehicle in its class.
It gels with my experience with Mercedes sedans. Until I got to the very top of the line S-series like the 5xx/6xx, the owner experience on recent models was still a step down from what it was like leading up to 2000, mostly with fiddly bit details and robustness/conscientiousness overlooked in those details, and this quality corruption seems to have infected the other product offerings from your description. The core vehicle itself was fine, but I'm not paying the Mercedes premium just to overlook those details.
Maybe I'll stick with my original plan of getting a Toyota Hi-Lux and convert + tow what I want instead of lumping it into an all-in-one large commercial/trade van.
What do you do in your Accord? You commute in it, or something along those lines, and that's probably about it. How much back seat wear is it getting? You got kids fighting back there? Do you stick your new dryer on the roof or do you pay the $20 for delivery? Your peers probably answer those questions about the same way. Meanwhile, several tax brackets down things are way different. Some single mom's four kids are doing their best impression of UFC in the back of her '09 CVT Altima, no wonder the seat is ripped, the floor contains a dozen types of dried soft drink syrup and the "window lock" switch is worn out by 100k. The differences only get wider as you start considering vehicles that are sold as having a lot of utility (wagons, SUVs, minivans), at the lower price tiers people size these vehicles to be just barely enough for what they want to do. At the high end people are buy way more vehicle than they need.
Let's even remove brand from the equation. How many grand Marquis do you see on the road these days? Probably 2 for every non-cop and non-ex-cop Crown Vic you see. Do you think that is in any way representative of the sales numbers when those things were rolling off the line back in the day? Of course not. Vics out-sold Grand Marquis and Town Cars by a wide margin. But a greater fraction of 'Vic buyers rode them hard and put them away wet with the intention of getting something else around 100-200k. The older, wealthier Grand Marquis buyers did the maintenance on schedule and kept them in good order so they lasted longer.
A key mechanism of "lasting longer" is price. People have different expectations and give different treatment to a car depending on price. So you trade in your Accord or whatever, it's in great shape. It goes on the used car lot for a lot of $$. So that ensures the the statistical next buyer is more well off, expecting it to last longer and therefore more willing to care for it. Meanwhile the guy that buys the Altima from the above example pays pennies for it and is expecting it to go maybe 50k before needing something big at which point he intends to dump it. So he's not gonna fix that window lock switch. He's gonna have no qualms about letting his dog f-up the already torn back seat. He's also gonna skip the transmission fluid changes and air filter and generally neglect the car because there's no reason not to if you intend on dumping it in short order.
You can run the same comparison on '00s Impalas and the Buick equivalent (both generally regarded as supremely reliable cars). The Impalas got beat and thrown away. The Buicks are still around (proportionally).
You don't think Ford, or GM, or whoever, makes reliable models for the same reason you'd never consider buying a house anywhere other than a good school district. It's a self-reinforcing expectation foisted upon you by the kind of people you surround yourself with.
> You don't think Ford, or GM, or whoever, makes reliable models for the same reason you'd never consider buying a house anywhere other than a good school district. It's a self-reinforcing expectation foisted upon you by the kind of people you surround yourself with.
Completely wrong and incorrect. I’ve owned and driven Ford. They were not reliable and one model I had was officially recalled 17 times, but had numerous outstanding issues that were never recalled for those problems. Toyota and Honda owners don’t have these kind of concerns.
I will freely admit that Canada makes more reliable Fords (and GM) than the US, and the reliability indices reflect that fact. Back in the day, I knew many people who would only buy Fords and GMs made in Canada for this reason.
Service was:
Two alternators, installed by me.
The usual brakes and tires, half installed by me.
Couple of gas caps. (Wtf?)
Two sets of the bes plugs money can buy because that engine was the one with crazy thin threaded areas where the plugs go. Had the dealer techs do those. And I went to a rural dealer, had a great experience.
Water pump, installed by local shop.
I would still be driving that rig, but it had an internal engine component failure that costs more than the thing was worth, so I sold it to a family here for a couple hundred bucks. Husband does his own work, has small shop, can profit on the vehicle.
Was a great vehicle. I got it from a shady dealer who I out dealt for a purchase 3 percent over invoice, and zero back end contract adders. (Took 6 hours, but literally saved me just south of 15k)
I agree with you, all that said. The dealers near me are the worst! That is by far the more common experience.
I have family in the rural part of the State and the dealer there is awesome! Would recommend.
My Ford driving experiences do not agree with you. But, that is all our own experiences too.
One of my favorite Fords was an old 1980 Futura. Box car, 4 cylinder, 4 speed manual trans. That thing got crazy good mileage and was fun to drive. Wonderfully old school black with plaid interior, that old AM radio with center dash speaker, lol. I went 100k in that car. Got it for a song too. Ugly.
https://www.consumerreports.org/car-reliability-owner-satisf...
Regardless of manufacturer among well-known cars in the U.S., the economics of a car dealership do not change from one to the next.
I waited six months for a brake booster replacement in my Audi SQ5 as it sat in the service center. They did give me a loaner the whole time though...
Try that with Tesla. Hey, we can give you Uber credits. Hope they're usable in your area, and you didn't have too much to do.
The "dealership" model needs to be killed off. It's probably just a few dozen moguls that make money off of these dealerships and spend most of their money lobbying.
I don’t love the dealer experience, but they distribute the wealth of the auto industry regionally instead of concentrating it in Dearborn or wherever. Local dealers are always sponsoring little league teams and paying property taxes on relatively valuable real estate in a way that Tesla never will.
I dunno, it’s hard to argue this if you take it as gospel that the economy is at its best when it’s finding efficiency at whatever cost. I don’t feel super strongly, but I do think there’s something to this.
https://old.reddit.com/r/carmax/comments/cx82v8/carmax_refus...
Kind of reminds me of stories of folks who need support with Google account issues - sometimes things like that just slip through the cracks. Google might have processes for typical cases, but if a weird corner case arises, it can be impossible to get someone to make an exception to help you.
I wonder if things would go the same way with centralized sales and repair processes ... "hey my new car is having this weird issue" ... "sorry the algorithm says everything is within spec, go away", rather than potentially being able to contact multiple independent dealership service departments until someone is able to reproduce/fix your issue.
Guess what? The dealer sells multiple cars per day. You don't know enough to be a good negotiator against them.
Same thing as venture capital vs company founders. Founders found a couple of companies which do a couple of rounds each. VCs make way more investments.
Right - so let's get rid of negotiations all together and everyone pays whatever absurd price the sales team at Ford can think of without laughing out loud.
This isn't a box of cookies folks... besides your house, it's likely the most expensive thing you'll ever buy.
There is no "one" price for the asset... unless we remove all the competition that drives down prices (dealerships) and put all the assets into a single basket owned by one of a small handful of manufacturers in the world. What could go wrong?
If there are no negotiations, and Ford's price is too high compared to the market, Ford is going to lose sales. That's micro-economics.
> besides your house, it's likely the most expensive thing you'll ever buy.
This is Hacker News, and I've spent 10s of millions on servers, colo, and cloud.
> This is Hacker News, and I've spent 10s of millions on servers, colo, and cloud.
I'd bet you negotiated those contracts too.
I did negotiate server/colo/cloud prices, but I spent person-months of effort deconstructing what the right price was. I've never done that for a car.
I once interviewed for a CTO job at a major storage vendor, and in the discussion they said that most of their major customers successfully reverse-engineered prices, and that kept their margins down. I've heard that (over beers) from some server resellers, too.
What does this mean? Did they perfect the negotiating process? Did they figure out what your margins are, then demanded that you halve them?
The customers figured out the prices of the hardware: disks or flash, a way to connect them to a "server", the "server", the network that the "server" offers.
If it's truly absurd then they'll walk away and buy a cheaper car (or a used car) instead.
What is the point of learning and trying to be intelligent if everything around you gets training wheels put on it? Oh wait, it isn't for our benefit.
Yet another case of losing opportunities under the guise of helping stupid people.
You don't have to be faster than the bear, just faster than the slowest person to come out better.
When I buy cars I shop around, there's surprising variance in dealers depending on what's going on with them. If a no haggle place has the best price I'll buy that. I haven't had that ever be the case as they quote MSRP.
Now societal. Sure, car dealerships may be “predatory” (I argue against that, some may be but most I’ve dealt with are opposite of that because they want your business), but at the end of the day it allows for more people to have jobs and participate in the economy. At some point we, technologists, are going to remove everyone’s job from them and we’ll act surprised societal uprisings happen because there’s no jobs available to the average Joe. Now I’m not arguing against automation, but car dealerships employ millions across the country, I don’t think removing those jobs from our fellow citizens who may or may not be able to do much more than sell cars, to no fault of their own, just to make a few more dollars for the manufacturer at “ease of the consumer”.
Once again these are my opinions, I’d love to hear from people who think this could be a good model for selling vehicles and will take them into full consideration.
A lack of dealerships does not mean that there are no showrooms or test drives. There's nothing stopping Ford, BMW, Mercedes or whoever from putting in a showroom next to a Tesla showroom. In actuality it makes it easier since a showroom doesn't have to have inventory; you can put them in places where a normal car dealership couldn't exist (this is exactly what Tesla is doing). I saw a Genesis showroom in an airport once...
The state I live in has 1 (one) Tesla shop. For the whole state. Do you think the other car makers would be able to work with one showroom per state?
Also, not all Tesla sales happened after consumers visited their showrooms. Tesla itself planned to close most of their showrooms at some point [0], only to reverse it later. I’m sure they were confident their sales wouldn’t tank when making such decision. One dealer per state may be too few for Ford, how about five? or ten? Do you think Ford can’t afford five or ten showrooms?
[0] - https://www.theverge.com/2019/2/28/18245296/tesla-stores-clo...
> Tesla itself planned to close (all) their showrooms at some point,
Maybe for Tesla it could work. For Toyota - they'd be insane to do something like that.
> Do you think Ford can’t afford five or ten showrooms?
They could afford, but that would cost them. And it probably won't be very efficient. For Tesla, whose buyers have little concern for price, and whose meme value is obvious, it may work. For Ford, which very much competes on price and utility with about a dozen other makers, I don't think such a move would be survivable. They could sell one special model this way, maybe, but making whole business - I'll believe it when I see it, done not for a niche rich people's car but by some mass-market vendor.
Tesla mostly does test drives out of showrooms, but there is this:
> Tesla occasionally hosts test drive events for those who don’t live near a showroom. You can check out our events page to find regional test drive tours near you.
It's not like selling a car is a super specialized skill. We're also at very low unemployment. The people who were selling cars can switch jobs. People switch jobs all the time. Losing a job generally doesn't prevent someone from participating in the economy.
Mechanics can open their own shop or work at a Pep Boys. Likewise, the underwriters can work elsewhere, probably even remotely.
At some point we, technologists, are going to remove everyone’s job from them and we’ll act surprised societal uprisings happen because there’s no jobs available to the average Joe.
This is a problem of late stage capitalism, not technologists or automation per se. A job is only mostly a requirement to have your needs met because our society says it is. It doesn't have to be that way.
Tesla has made fixed-price online sales work so far, but notice that they're scrambling to build the support network. They're re-creating most of the dealership model but bringing the ownership in-house. That's only good if their customer service is good, because now you don't really have any good alternatives.
> why has this obvious disruption never come up in the last ~100+ years of car sales in this country and all over the world?
This is important. We can try to point to laws, but the more likely answer is that the current model is the best we've invented yet. There have been attempts to change, and more often than not it's the consumers that reject it, not lawmakers.
Nevertheless, new vehicle sales including F&I is a non-negligible factor in most dealerships' bottom line, and new vehicle sales can also be a significant driver of service volume (both organically and as a result of loyalty incentives).
You're also correct in assuming COVID has been good for new vehicle sales profitability.
Here are the per-segment breakdowns reported by the three largest dealership groups in the US, before and after COVID:
1. AutoNation (AN)
2019 Rv: 52.3% New, 25.6% Used, 16.7% S&P, 4.8% F&I, 0.6% Other
2019 GP: 14.3% New, 10.4% Used, 46.1% S&P, 29.0% F&I
2021 Rv: 46.7% New, 33.4% Used, 14.3% S&P, 5.4% F&I, 0.2% Other
2021 GP: 24.3% New, 13.9% Used, 33.8% S&P, 28.0% F&I
2. Penske Automotive (PAG) (excluding non-retail auto dealership businesses)
2019 Rv: 45% New, 35% Used, 6% Fleet, 11% S&P, 3% F&I
2019 GP: 23% New, 12% Used, 1% Fleet, 43% S&P, 21% F&I
2021 Rv: 44% New, 38% Used, 5% Fleet, 10% S&P, 3% F&I
2021 GP: 27% New, 17% Used, 2% Fleet, 34% S&P, 20% F&I
3. Sonic Automotive (SAH)
2019 Rv: 47.0% New, 35.0% Used, 13.0% S&P, 5.0% F&I and Other
2019 GP: 15.0% New, 10.0% Used, 44.0% S&P, 31.0% F&I and Other
2021 Rv: 41.3% New, 39.3% Used, 11.3% S&P, 8.1% F&I and Other
2021 GP: 24.1% New, 6.9% Used, 35.2% S&P, 33.8% F&I and Other
(Rv = revenue as percentage of total, GP = gross profit as percentage of total, New, Used, Fleet = vehicle sales, S&P = Service and Parts, F&I = Finance and Insurance)
(source: SEC filings)
N.B.: Gross profit may be a misleading figure in this comparison, as it excludes major expenses (notably, salaries and commissions for non-administrative staff) directly attributable to particular business segments. Alas, I'm lazy, and these are the only per-segment percentages immediately available in all dealership 10-Ks.
With all that said, I imagine many, possibly most, dealerships would remain comfortably profitable even if net (non-F&I!) profit on new vehicle sales were zero.
Finally, note that fixed vehicle pricing is not exactly a new idea: GM famously introduced the Saturn marque with a similar tactic. And as with this older example, I assume Ford isn't planning to mandate fixed pricing on financing, insurance, trade-in allowances, third-party extended warranties, dealership-installed options, or anything else beyond the selling price of the vehicle itself and possibly certain minor fees related to the sale.
The big 3 auto makers are all located in Michigan, USA. If they sold a vehicle direct, the sales tax dollars goes to the State of Michigan. Which means all the other states are missing out on *significant* tax dollars.
To force each state to get tax dollars, local dealerships were established. That way tax dollars go to the state the vehicle is sold in, rather than the state the vehicle manufacturer is located in.
I'm curious if this has changed at all over the last 20 years with the rise of e-commerce. For example, when I order a product on Amazon, do I pay taxes on that product for where I live (where the product is "purchased"?), or where Amazon is headquartered?
To answer your question though, you pay tax to the state it is delivered to when ordering from Amazon.
I lived in Virginia, bought a car in Delaware... no sales tax in DE. Wohoo? No, had to pay Virginia sales tax when registering the car.
You absolutely pay local sales tax on amazon, not Washington salestax. Taxation is about nexus of transaction.
I just bought a car from an Oregon dealership, but I live in the state of Washington, and that’s where the vehicle is registered.
Washington got every cent of sales tax from the sale, and Oregon didn’t get anything.
https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
> The big 3 auto makers are all located in Michigan, USA. If they sold a vehicle direct, the sales tax dollars goes to the State of Michigan. Which means all the other states are missing out on significant tax dollars.
Also, this is not how it ever worked. Sales tax was and is never owed to the state the business is operating from. That is why buying online resulted in being able to evade sales taxes for many years, until the above Supreme Court ruling.
I wrote evade above, because the other states were not technically missing out on tax dollars. All states with sales tax have a “use tax”, which is owed to the state for bringing in merchandise that you have paid less tax on than if you were to have bought it in the state (Florida might be the only state without use tax for online purchases).
However, pursuing people for use tax for small items is a costly endeavor so most people get away with it. But a car is easy, since it has to be registered, the state can easily demand the use tax before making it road legal, and they do (for example when you buy from a no sales tax state and then take your car to be registered in another state).
It's not that I enjoy haggling with car salesmen, walking out the door and getting hunted down in the parking lot like an animal... I don't... in fact I hate it. But at the end of the day I get a deal I'm satisfied and comfortable with - and it's always below MSRP - far below.
I think what we're seeing here is a combination of the younger generation's fear of conflict (a negotiation is an adversarial conflict), coupled with car manufacturers realizing a lot of people are totally OK paying $10,000+ over MSRP... almost "bidding" for a car.
I fully expect prices to increase, while overhead decreases (no sales staff, no stale inventory, no loss of inventory, rent payments, etc). But the younger generation will feel great because they got to click a button and a grossly overpriced car shows up the next day - just like "Amazon but for Cars!".
I can't see any positive coming out of this. You don't buy anything over a few thousand bucks without negotiating. Even the photo copier at your office was negotiated for days or weeks... how can someone buy a $50,000 vehicle at MSRP/Invoice price and claim they didn't throw away money?
It used to be only suckers walked into a dealership and paid sticker price... bigger suckers payed more than sticker price (gotta have that undercarriage coating), and everyone else paid closer to the true price having researched what similar vehicles sold for etc.
Yes, there might be outliers where an extremely good haggler paid less, but that would be outweighed by a novice who paid way more, and the average has to be higher because of the higher overhead.
MSRP is a suggested retail price, which is based off the manufacturer's costs + what they believe is a reasonable margin for their vendor (dealership in this case).
Ford cutting out the middle man means they can offer cars at the same exact price (MSRP in this case), but not have all the expenses dealerships have... meaning massive profit for them.
There is literally no incentive for Ford to offer the cars for less money. Plenty of people have eagerly paid $10,000+ over MSRP already - indicating they could even raise prices if they desired.
Look at Carmax as an example. Their entire business is built around the "no haggle" model - and if you know anything about the cars you are looking at, you will not find any good deals there. Everything is overpriced - but they will tell you it's their "rock bottom price" and any defects or problems have already been factored in.
It's just a sales tactic. Plenty of folks walk into a Carmax believing they're getting the best possible price without any of the hassle... just like their commercials tell you.
You are saying that in the fully online world, Ford would get away with the same MSRP of $16k. This is not possible as long as another competitor can produce the same car for $10k or less and charge say $12k for it. Why would any consumer go for Ford in this case?
I haven't used Carmax but that's different - their whole business is in flipping cars and they have to make enough profit to run their website on top of it. So I would assume it is always going ot be higher price than what you'd get from elsewhere.
For example when I want to buy a car: I start at Carmax which I know its the highest price i can pay for the car. In history I have always been able to get a used car for 2.5K -4K cheaper elsewhere .
This is typically how it goes.
1. I determine which make,model, year car I want.
2. Determine what carmax has it listed for and make that the highest overpriced value for the car.
3. I send out emails and call dealers for similar cars ( millage,model,wear , etc) give them my price that is under 2.5K - 4K less than carmax.
4. they say sure come on in.
5. The games begin and the bs runs from the salesman script that tries to convince me that a manufactured car in the 100Ks is a custom one of a kind vehicle that I will never be able to buy again.
6. i Say here is my price and the good cop salesman than sends me to the back to the sales manager who says I will put him out of business if he sells me that vehicle for that price.
7. I say I understand then I walk out and he lets me walk out.
8. A few days or even a month later he calls me back says he can do the deal then send me back to the sales manager again.
9. the Sales manager than says oh sorry we cant do that price because its a cash offer or that I have to use his preferred loan provider. Or tries to convince me to take his loan provider anyways and then cancel it by paying cash or refinance it a week later.
10. I walk out again or I get the car. One case I had to walk out again until I got another call to come back. In most cases I only waste about an hour in the dealership all together talking to the salesguy and manager, since when the send me to the back to the sales manager I typically tell them I have 15 minutes to make it happen or you can call me back when you have all the information you need to make the decision.
So atleast today we have the no haggle places now to tell us what is the ripoff price for the car and not the dealership sponsored bs MSRP or the kelly blue book crap.
The crazy thing is that I actually want to buy the car from carmax because I do like the experience better, but its not worth paying 2.5K to 4K more for an equivalent car.
Atleast with the carmax and other fixed price dealers , you know what the worst possible deal is and can typically save 2.5K to 4K by going to a normal dealer. You just have to be willing to play the stupid games with them.
Haggling over prices does not benefit consumers, just like haggling over wages doesn’t benefit employees.
The Carmax approach is great; clearly people are willing to pay to avoid all the normal hassle. Maybe their prices aren’t the best “if you know anything about the cars” -- where does that secret knowledge come from? Wouldn’t it be good if there were multiple Carmaxes and they had to compete on price and service? As long as the real prices were listed on the web and were always the same for everyone.
The incentive is clearly competition from other manufacturers. In a world of dealerships, competition is murky because you can't really know the final price of a car unless you play the haggle game with every dealership. But if every manufacturer had all the final prices online, you can easily evaluate what is the better deal.
There is no competition with Ford's direct sales website. None.
At least dealerships attempt to compete on price.
Do I have to buy an F150 Lightning? I do not.
Since I'll know a fair price of the vehicle before I run across that, I can determine if it is a "ripe off" or a fair market price, with far less hassle/wasted time. I'd always buy from a no haggle dealership if the price was competitive (and my last vehicle purchase was exactly that, it was +-$1K from normal price based on vehicle loan records).
You also have it backwards. The current system of "MSRP as guideline" and you have to negotiate to find the real price makes it more difficult to compare prices between cars and automakers (unless you relish negotiating the prices of 4 competing cars simultaneously at 4 different dealers). The current system is set up precisely to not be price transparent.
Just like now, but dealerships add a whole layer you have to figure out by determining likely "discounts" between different brand's dealerships.
If the manufacturer could charge more they'd already be doing so, the dealership doesn't actually dictate the prices, they get told the price and are expected to negotiate up then keep the difference.
You would only feel ripped off because some dealerships say "No Haggle" and some do haggle. If every dealership has the same price for a specific car then literally by definition you cannot get ripped off.
You're also fixating too much on the meaning of MSRP. Before the car shortage MSRP was basically just a marketing number to anchor negotiations at a high number (except for cars in super high demand). Some automakers were notorious for deeply discounting below MSRP and some didn't discount much.
Dealerships compete to win your business. They compete in varying ways, which include price and service.
Who does Ford compete with if they set all of the prices and offer direct sales for an entire product line (EV's in this case)?
The answer is "nobody". And we all know competition is what benefits the consumer... this is a regression, not an advancement.
The dealership model can use a shake-up - nobody will argue otherwise. But the answer isn't to destroy competition and allow manufactures to set whatever price they want. That benefits literally nobody except Ford.
By your logic Ford can just jack up the price they charge to dealers and the dealers would have no choice but to accept it. But that's not true because Ford has to compete with other automakers.
There's a reason Tesla/Rivian can charge so much, and it's not because they're so much better built or way more luxurious than others.
Again, by your logic Ford can just jack up the price they charge to dealers and the dealers would have no choice but to accept it. But that's not true because Ford has to compete with other automakers.
>The answer is "nobody".
It would seem to me that the answer would be "every other EV manufacturer"?
Literally every other car manufacturer. Wtf…?
Last car I bought, a Subaru Forrester, which is like 25% of cars in Seattle, I knocked $4000, off of msrp by haggling from 28k to 24k, cross shopping across dealers and walking in with a set price I was willing to pay after finding the lowest dealer. Also going in during 2 manufacturer rebates (one cash, one charity match), and at the end of the quarter. 2018s were starting to show up, bought the 2017.
They got real triggered when I said "all you gotta do to put another name up on that trophy board is come down $500 more" (they were writing all of the sales on the window as they happened).
Brought a book to read while they went in to "talk to the manager".
While there is the option to compared to 'no haggle', I can sit there and waste an hour on their BS for $4k. I find it fun and interesting, and I don't buy cars when I have to only when I want to. Helps to have multiple backup transportation methods.
But seriously-- if we're comparing "no haggle" to "haggle" then it doesn't really make sense to include the manufacturer rebates in your total. You'd presumably get those even if dealerships didn't exist.
"Hi, would you like to buy a can of soda for 50 cents? It's warm, because this is a half-ass deal..."
If I see a widget and the widget meets my needs and the widget fits my budget and I buy it, I don't care how much profit they're making. Why does it matter?
I think the act of feeling ripped off or having to make sure someone only makes a certain amount of profit is a path that leads to anxiety.
this seems unfounded, with no way to ascertain it. and likely driven by some unconscious biases
The younger generation doesn't necessarily fear conflict. Just look at how it's winning the conflict about conflict against the older generation.
They (we) want to reduce these kinds of negotiation because they give an economic advantage for entirely arbitrary reasons: someone getting a car cheaper because they negotiated harder or getting a better job offer because their trust fund allows them to walk away with ease does in no way benefit society. Whatever they save, someone else has to pay extra to make the system work for the dealerships.
Worse, the ability to negotiate is not some random variable. It's tied to aggressiveness and a sense of entitlement. It's a lifelong rebate for bullies that practiced that sort of thing by stealing younger kids' lunch money. And the only reason it has survived as long as it has is because that happens to be the demographic car salesmen also hail from.
Worst, it isn't even just about someone's ability to assert themselves: a salesman may well react entirely different to the same exact words and behavior based on criteria that would invoke laws against discrimination in other cases. I remember a number of stories of black homeowners being quoted 30 % when having their homes' resale value assessed. Don't remember seeing any tests for car sales, but I'd be surprised if it didn't replicate there: be a white broad-shouldered tall good-looking man and your lowballing makes you a strong opponent. Lack any of those criteria and it's considered an insult to the profession and you get the cold shoulder.
I don't feel like being subjected to hours of manipulation and predatory behavior. I surely know how to push back and deal with it, but it doesn't mean I want to.
Local taxis are often cheaper than Uber/Lyft now since they don't have surge pricing. But the downsides are much worse that people will still pay a premium to not deal with it.
In reality, just like you no longer get a discount for buying online (remember "it's cheaper since the company doesn't have to pay for a brick & mortar store!"?) I wouldn't expect Ford & others to pass the savings along for long. But I'm okay with that given the upsides of saving me time and some mental abuse.
In practice ... well, maybe everyone makes more money if no-one undercuts each other too much. Is it collusion/price-fixing/anti-competitive? Or is it just good business?
One thing is certain - the more middle men you have, the more expensive it will be.
Try to haggle down the price of a bean burrito at taco bell and see how much fun that is. There are all kinds of bean burritos to choose from in mi barrio, but they aren't budging to make a deal.
The same people haggling for cars are paying over asking on house bids.
I've haggled at a guitar center, but then I can't do the same thing at a hot topic when I pick up my chain jeans.
It's a weird game, but more bragging than haggling. The sense of satisfaction at having bargained it down is a pretty good rationalization after you've purchased.
I don't haggle over the price of gasoline or milk. It's not because the price is low. It's because the identical product is available from a dozen local merchants and I know which is cheapest or which has the best lit parking lot or which has self-checkout. Price becomes so standard that merchants try to compete in other ways. And for those that do choose to compete on price, $0.05 difference on a $5 item is a big gap.
Think replacing local grocery stores with Walmart. Low end jobs stay, high end jobs go away. Further hurts small towns.
My guess is that a good chunk of the efficiencies from this model will go to Ford corporate so it’s a wealth transfer from small towns to big co managers / stockholders.
Proximity and diversity. How are you going to have direct sales depots in every random town in the world? And which towns get which brands? Makes no sense.
How about The Internet? Might work…
I had a Subaru, and Subaru had a problem for a decade+ that their head gaskets were tissue paper and frequently failed. So I had one free replacement mid-warranty.
I went in just after the warranty expired for a normal service and lo and behold, the head gasket was bad again. The dealer replaced it for free. What happened? They defrauded Subaru.
So sure, there's an advantage. Not only will a dealer happily be aggressive at any warranty repair, they'll even commit fraud doing it.
Sometimes manufactures will direct dealers to fix things that are long out of warranty when weird things happen (like in Seattle when that radio station sent out a bug that bricked the radios over RDS -- the manufacture directed the dealerships via a service memo to replace the radios and bill the manufacture).
Service is a decent part of most dealerships these days, and a good amount of that income is driven from warranty claims.
2. Trade-ins. Most new car dealers also sell used cars (in fact many make more profit on used cars than with new cars). Because of this they can usually give you much better trade-in valuations than Tesla, which I believe just sends cars to auction. Obviously you could also just sell to CarMax/Carvana/etc. or sometimes sell a car to a dealership without buying a car. But this is an added bit of hassle.
Dealerships are very good for "try before you buy", "easy returns", "fast delivery", and "easy upkeep and repair".
They don't change anything for warranty, and they don't necessarily provide the biggest selection.
So I think best price is the only dimension that dealers could be worse at, but at the same time, you can often negotiate paying below MSRP with a dealer. I guess we're assuming most of the time they take a premium, but it's hard to predict what the prices would be if dealers didn't exist, would they be lower? By how much? Maybe they'd be higher?
The only thing about online orders that is pretty sure is convenience, you can buy a car in your bed and pyjamas, no need to talk to anyone, browse online and purchase, car arrives at your door.
I don't think the counterpoint has changed since it was codified in the laws of US states: limit the power of large corporations and their influence over sovereign states. Our ancestors were rather circumspect about corporate power within the US and created mechanisms to insulate themselves from that power.
The emergence of multinational corporations has naturally produced a similar model at the nation-state level: the ability of a global private enterprise to operate in some nation frequently depends on the existence of a domestic component, often in the form of a subsidiary with an obligation to retain executive staff that are citizens subject to the laws of the host nation.
My experience with dealers has been good. They've arranged financing competently, dealt with recall work, honored warranties and supplied OEM quality parts when needed. Nothing as complex as a passenger vehicle and all that goes into realizing one is ever perfect, but the dealers I've dealt with have met all of the expectations I've had of them. I suspect that much of the enmity towards dealers arises from unreasonable expectations. That's a suspicion. This isn't: the same people bitching about dealers today will be bitching at least as much about manufacturers when the dealers are gone.
At some point in this discussion someone speculated that the delegation of EV service to dealers is not viable due to the nature of EVs; the manufacturer must be directly involved or Bad Things will happen. That may be true. I don't know. I do know that, short of some form of mortal danger, I can't imagine a better argument to avoid EVs than that; I will never, ever own a vehicle that can't be properly serviced without the manufacturer's direct involvement. That would be deeply stupid.
And many dealer families run multiple brands under one name.
Plus with cars basically becoming high tech batteries on wheels with dozens of minicomputers. When an EV really breaks down, I doubt your local mechanic can do much about it. At the most, he can swap out one module with another (if he has it). More likely the only thing the dealer can do, is give you a loaner car while the manufacturer ships the modules and components you need. Ford and Tesla are probably better off giving you a loaner car directly and when the parts are available instruct you to go to the nearest repair facility or in the worst case, the technician will come to you.
Beyond that dealers provide distributed and localized inventory management. Modern car plants basically have to run at full capacity year round, but sales are much more seasonal and unpredictable given effects of gas prices and other economic factors, many of which can be regional. The dealers find underused land all over the country and have huge lots that allow for cars to be delivered on a consistent year round basis which provides efficiencies in the logistics operations since the trucking, shipping, and rail contracts can have permanent workforces and long term predictable contracts. When inventories pile up for specific models the manufacturer can provide incentives and dealers can innovate and adapt to take advantage of these using local knowledge of the conditions in their community in a way that manufacturers would have a harder time doing. Dealers can finance their floorplan using independent and local sources of capital for inventory and buildings which allows the manufacturers to extend operations without taking on additional debt, or putting their own finances at risk.
Some of these factors played more of a role in the past, when new car companies were building out their dealership networks and benefitted more from offloading risks to dealer partners. Tesla was able to innovate with their small showrooms in malls largely because they went for a long time with only a small handful of models, and because the buzz around the brand and vision meant that there has always been a waiting line (still the case), so they’ve never tried to compete for the “car broke down, need something new this week” market, which has had no choice but to head to well-inventoried lot.
Forcing dealers to do repairs only effectively meant risking that best dealers would switch to other brands, other dealers would have to charge more for the service and these two factors could potentially kill any brand. No single manufacturer could pull it off, and even if they could find a way to work together to change legislation, it would be way too costly and way too risky.
Competition. In a decent sized city you will get multiple dealers for the big names (Toyota, GM, Ford etc) and they will compete against each other. Because of this, you won't pay over MSRP, winter tires at cost, discounted warranties, free oil changes for life and they generally try really hard to keep your business through good customer service.
Based on what metric? I have a hard time looking at Tesla's sales, revenue, profit, production capacity growth and not thinking they will continue to be a leader in EVs far into the future.
you’re the leader and category creator until one day you’re just another player in a sea of competition
There's no hatchback, mini, SUV, or truck models available yet... And it feels like Tesla is even further behind in these areas because they are not giving any roadmap details (that I've heard of), while other companies have offerings available now.
I hope Tesla can remain a market disruption and continue to push people to electric, but they currently are a one trick pony (which isn't a bad thing, it let them enter the space)... But as a one trick pony, I would agree they do not currently "look like THE future of EVs"
Tesla shipped that many cars in 2016, and is growing 50%/year.
Ford competes directly with the Y, and also in an entirely new segment Tesla does not compete in -- the pickup.
Chevy has the pickup coming, and already competes in the affordable compact car segment (27K MSRP for a Bolt? That's getting into 'excellent value' territory) that Tesla does not compete in. GM also has the Hummer, which is blazing an entirely new trail.
Then you have VW, Kia, Polestar, etc. Tesla has a nice head start, and a good charging network, but rivals are catching up fast and will end up outpacing what Tesla can offer. The Model S is aging, with no apparent revamp in sight, and if the Model 3 follows that same pattern then Tesla is quickly going to look outdated while the competition is one-upping each other in new designs.
There's also a fair number of people who do care about reliability, don't want a touchscreen dashboard, don't care about fart gimmicks, and want windshield wipers that just work. AP is no better than the competition, and FSD is a gimmick that appeals to a very particular kind of buyer.
I enjoyed my P3D but have no expectation I will buy another.
Well, personally, based on Elon Musk's Twitter. Unless he is leaving the company very soon, he's going to take the company down with him.
From a more technical perspective, they're literally the only EV manufacturer selling cars in the US without a CCS connector. (With the minor exception of Nissan, who have already announced that the Leaf will switch from Chademo to CCS.)
And finally, from an "I actually own a Tesla" perspective. I would never buy another one. Not because of the car, which is fine, but because of the service experience. It's awful. It's so bad, I have trouble putting into words how terrible it is. I live in fear that something will go wrong with my Tesla again, because getting it fixed will be yet another nightmare.
So telling people "just don't negotiate" is about as reasonable as telling people "just don't tip" in mandatory tipping situations, it is a nice concept but ignores the economic reality of people trapped in the messed up system.
So literally nobody likes the dealership sales model. Even in the 90s the old buyers hated it too.
The only reason it still exists is because of successful lobbying by dealer networks over 70+ years ago to codify their business into law.
Dealers are government corruption plain and simple. They offer next to nothing, sometimes scam us outright, but we are required to patronize them if we want a new vehicle.
Real estate agents on the other hand mostly just charge too much.
[0]: https://www.washingtonpost.com/business/2022/02/12/ford-gm-d...
The latest communication is that order banks will open in January. Ford will be sending invitations to build / order in waves as to keep up with the demand. The invitations will be prioritized based on reservation time stamps. Your reservation is number 138 at our location. I have no way to track where you are in the total reservation list. Once 2022 model orders have been fulfilled, Ford will start the process over again. They expect to start taking orders for 2023 models about mid next year. Given the demand and number of reservation ahead of you, it is reasonable to think that you will not be able to order until mid 2022 for a 2023 model. I also need to mention that Managment has indicated there will be an addendum added to the MSRP. We are expecting that to be about $10,000 but could be a little lower or higher dependant on supply vs demand.
I'm done with dealers. I recently helped purchase a car for my father after his was totaled. I talked to dealer and he promised that they are selling at MSRP. Next morning I call him and he wants above MSRP unless I RESERVE NOW. I told him I'm no longer interested in doing business with him and went elsewhere.
It's not entirely on the salespeople though. Their compensation structure and the nature of not respecting return customers, incentivizes this behavior
It's an avenue for abuse that's can't be triaged at a glance, as you've found.
People can SMS me. Then I can block numbers from abusers.
(no comparison intended to perpetrators of emotional or physical abuse)
Shame about the interior though.
If some dealership gets sanctioned by a manufacturer for being jagoffs, they'll put up a new sign next week and be a Toyota (or whatever) dealership. The manufacturer knows this and won't alienate them for one customer.
My only concern is where all the scumbags are going to end up if car dealerships cease being a thing.
I loved that car, drove it until it the wheels fell off.
Point being, Tesla is hardly the first one to pull off this model.
https://www.toyotaofrichardson.com/blog/2016/september/29/a-...
Also, it no longer exists. Dealers don’t like it because they make less profit off Scion cars. The incentive wasn’t there. You can see how it is different than the direct model Tesla use, and Ford is contemplating to adopt
And true Scion as a brand no longer exists, but it lasted pretty long.
In this case, Ford is not saying away with the dealerships - they're looking at them as distribution hubs, basically...like Scion.
The last new Ford I bought from a dealer was a 6 hour experience. I came ready and got my vehicle for 3 percent over invoice and avoided all the cost pack ins at contract.
It was brutal. And I used sales skills, as a buyer, learned from high octane types that get that money no matter what.
In the years following, people gladly paid me $1k, plus a percent of the savings off MSRP, to buy cars for them.
Did that a few times for a little extra spiff on my vehicle buy.
Was a Ford Expedition, 2000 era vehicle. Those are made on the F150 platform and are great outdoors rigs, though I won't ever get another one, nor a new vehicle from a dealer again.
Someone will make an EV Expedition type rig. Probably Ford will and I want it.
People paying non trivial money to avoid the dealers is exactly why Ford is doing what they are doing.
There are a lot of people who commute in a sedan and have a Tacoma or Odyssey that gets driven when needed and would replace both with a fullsize crew cab truck if it weren't for a little voice in the back of their head telling them that such a vehicle does not project an image that is appropriate for the kind of person who lives in a million dollar home with solar on the roof in a neighborhood dotted with black lives matter signs.
An EV variant drops that stigma and will attract a bunch moneyed buyers who previously would never have considered a fullsize truck. That's huge.
yep: https://carbuzz.com/news/ford-mustang-will-go-all-electric-i...
I genuinely doubt the average Cybertruck customer is planning on using for hauling anything more than kids and groceries.
It's designed to get the guy who has a Tesla and a Tacoma in his driveway and who sees fullsize domestic trucks as a penis extension for backwards hicks to trade both those in.
This isn't about converting existing owners. It's about growing the potential market.
This article shows us how many new customers Ford is attracting: https://www.motor1.com/news/552814/ford-lighting-customer-ne...
It's only when demand is completely out of hand, or when you don't want to Osborne yourself, that you want to stop advertising.
[0]obviously hyperbolic but fleet electric makes so much sense because many are already centrally parked and the rest can be trivially recharged at home much easier than dealing with gas.
There are a lot of F150s though, and the Lightning’s design is distinct enough that it advertises itself even with a tiny fraction of owners actually converting.
Also, the ridiculous things people are going to try towing with that much torque will win some over as well.
They will sell very well
If car companies are going to compete in the future they will have to either eliminate dealers or at least force some type of structure to the sales process, otherwise people will gravitate to the companies that do (like Tesla).
Just a worse consumer experience that reflects poorly on the brand? Sony seems to deal with it with sold-out ps5 and resellers gauging.
I mean you're not the only one suggesting this is a problem. Ford clearly seems to have a problem with dealerships and their markup I guess (or I misread the article).
Just getting on a centralized waiting list would have been 10x easier and more user friendly.
Who's to say Ford can't "markup" either? To me that's exactly what it is...non-negotiated. If the dealer can sell a Mach-E for $5k above MSRP, Ford is leaving money on the table. Ford can bump up their non-negotiated price just as much. Why not? What are you going to do, go to another dealership and negotiate?
I can think of a handful of questions that need to be answered besides just saying "middle man bad".
What's the cost of delivering dozens of vehicles from the plant to a dealership vs delivering one off vehicles to a house? Or the cost of an OEM having their own employees distributed to answer questions on a vehicle. GM has more than 4000 dealerships...would sales decrease because it would be less accessible to customers to see, test drive and service vehicles?
I don't believe the current dealership model of huge lots, tens of employees is efficient. But I'm not so certain an OEM handling everything themselves is optimal.
I put in the order through Volvo online, and they confirmed the build sometime the middle of last year.
Volvo had an online order tracker, that shows progress from order acceptance to the car being in production, etc. But it was never actually updated. I was a little worried the car wasn't going to show up before my existing lease was up in June. So I contacted Volvo customer support in early March and they surprised me by telling me the car was going to be delivered to the dealer the next week. I had heard nothing from anyone in months, so that was a big surprise.
I called the dealer, who I'd never talked to until that point, and they confirmed the car was coming in the next week and setup an appointment to pick it up. Because used car prices are crazy they could also buy out my leased ICE Volvo and give me a bit of money back for it.
So the price I paid (another lease) ended up including the new C40 at MSRP, minus trade-in, minus CA EV credit, minus Federal EV credit, and minus a Volvo loyalty discount.
It wall worked out pretty well, but would have been nice if their order status page actually showed order status. I imagine it was a manual process to update it and somehow that wasn't getting done. I heard from other they had the same experience.
> In the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers.
If they keep making the right moves, and improving the whole Ford EV experience, I might be inclined to purchase a Ford EV next time instead of another Tesla.
The smaller dealers in little towns are completely screwed. They'll probably perish and be replaced by the manufacturer's online presence. Perhaps local "mobile bike repair" outfits will pop up to do local assembly and support.
The status quo, where prices are negotiated at dealerships, allows car companies to keep their real prices secret, and allows them to get more money from consumers who are less comfortable negotiating or don't have the time or energy to figure out what the real price should be. Fixed pricing will be higher for some, but it will also be lower for many. Fixed pricing also makes it much easier to compare prices across brands, which should result in a more competitive market.
What is Ford's plan for dealerships? Tesla has dealerships too right? I walked past the one in Red Hook Brooklyn. Or maybe that was just servicing? But they did have new cars there.
And why won't Ford be advertising EVs? Super bowl ads always have car commercials. How else are they going to be able to tell people about the EVs? Unless they plan only to use their existing clout to attract people once they're already in the dealership or site?
Lots of questions.
And they’re pissed at dealers doing markups I bet.
I say this because approx every month I get a postcard from a local dealership that references a car I haven't had for 12+ yrs. My sense is, many dealerships are highend mom & pops. That is, they suck at marketing.
That doesn't benefit the brand.
Tesla has corporate owned stores, which are different from dealerships which are independent businesses. The staff there will help you order a car, but ultimately they're just clicking through the website with you. All orders are processed through the website, and go into the same central queue.
Fixed price means what it says - no negotiation, just a fixed price.
Advertising is probably unnecessary. Word of mouth more than exceeds their production capacities.
What's the bottleneck with Ford building electric powertrains? Is it still the semiconductor shortage? Batteries? Production tooling?
Just was talking to someone today from Ford and chatted about that story. I said how much are you going to pay the dealer for every EV sold in their territory? He said nothing like that has been in the press. I teased him that's not exactly a denial. Are they going to be paid something to have EV's in the showroom or available for test drives? I was told you will have to wait and see.
Dealers aren't going to need the amount of real estate they've got now. Dealers make the most money from service, used cars and finally new car sales. I have noticed that some dealers have made the investment to service EV's which includes training and a minimum of two charging stations.
But some dealers have chosen not to do so. I would imagine the dealers not moving to service EV's are at some point in the future going to take a buyout and close their dealership, but that's just a guess.
Oh, I think it's pretty clear that unless this strategy goes totally off the rails, that's definitely where they're heading. It'll converge (albeit at different rates) with the shift away from selling non-EV products altogether.
Apart from the obvious and immediate profit bumps, there's knock-on effects, such as not forcing your customers to deal with the second least trusted profession in the USA. [1]
[1] https://www.forbes.com/sites/niallmccarthy/2019/01/11/americ...
This puts some real pressure on dealerships to change, as we slowly transition to a more EV world.
[0]https://www.npr.org/2022/03/02/1083913314/ford-modele-split-...
The dealer model (not just for cars) may have been a “good thing” once upon a time. When I talk to older generations, they always seem taken with the idea of a “good dealer”, someone to “take care of you.” But by and large (there are some exceptions), dealer model seems to have generally become less mutually beneficiary. In most domains, I loathe them.
Their idea of a "good dealer" was one who only ripped them off moderately.
I don't understand why this is newsworthy? I bought a non-EV in the last decade by putting the order together online on the manufacturer's national website, then processing it through a dealership.
Buying a car in the US was so unnecessarily stupid because of all the haggling and pussyfooting around what the damn thing is actually going to cost.
All credit goes to Tesla.
Buying a car with option to customize, same fair price everyone pays and ordering online without talking to anyone is the way to go!!!
Sure, some dealerships are solid but when ‘used car salesman’ is a trope, you have a problem. The current supple deficit and resulting dealer markups are a direct result of a short term perspective that damages the overall brand in the long run.
That’s my day job, thank you. I’m paid for bringing out actual actionable intelligence from such things and I’d like my personal life to be easier.
Dealerships are important as showrooms, service centers, a place to sell (slightly) used cars with brand warranties etc.
Yes. Especially because Uber and Lyft closing business is just a matter of time.
The overhead of HQ servicing each dealership is (approx) fixed. Some cover that with plenty to spare, others might be barely breakeven (after dealer incentives et al).
That said, even 20% of 3k is still 600 so that does feel like a positive for Ford (even without the dead weight).
- I have nothing against such model IF I can test-drive for free the vehicle, so if some vendor bring the vehicle to my home, 24h test, they'll get back no question asked, totally free;
- I understand big car industry want to use modern surveillance capitalism for target sells, not much an issue since we already know how this system work;
- IF they also provide on-side under-warranty service... They buy back used vehicles with someone who came and evaluate locally... It might be even good IMVHO.
It's clear the society at a certain level have shifted back to a direct producer-to-customer model, witch might be perfectly good IF is general supported by standard means, or might be a way to exploit consumers and intermediate OEMs like happen in many cases (cfr. Amazon, Wallmart etc to cite USA examples). The whole issue is probably a whole society comprehension of such model and I doubt there is such understatement without people training...
Giant already does this with bikes, in my area. They rent out carpool lots in low periods (weekends, basically) and people come from all over to check out their bikes.
Sure it's a little less instant gratification, but I wouldn't mind waiting a couple weeks for a Mazda pop-up to come by if it ends up being cheaper than a dealership.