I think each statement is true.
Context: for ages, OEMs (the factory) have had a belief that Americans will not wait to buy a car. There's also a bit of a prisoner's dilemma: if any automaker wanted to trim inventories, the customer could go to a competing automaker's lot and buy today. Since customers will not wait to buy a car, a dealership must have some quantity of vehicles that are acceptable to buy today.
Now customers are used to waiting and nothing really catastrophic happened to the dealer or the OEM. In fact profits went up substantially. If OEMs or dealers had worked together to limit inventory, that would be illegal market manipulation. (I'm sure someone may build a conspiracy theory out of this, but I do not believe any intentional market manipulation took place).
Dealerships hate carrying extra inventory because it costs money to finance the vehicles until they sell them.
However, there are also salesperson and dealership bonuses based on volume, so that individual salesperson is feeling the pinch. Kind of similar to how crazy home prices are right now (in many large cities) - the homebuyer is hurting, but the real estate agents aren't making a commensurate amount of extra money because the market is relatively inelastic.
In future American OEMs may move to a more European model where vehicles are built to specific customer order. This takes on the order of two months at the moment for many legacy reasons, but there is no need for it to actually take this long.
Note that with interest rates having been really low, even negative in real term, an inventory was almost a good investment with relatively good returns (if you could get your hands on it). Now with rising interest rates and falling inflation, the cost of financing might become a burden again.
Since Ford’s plan to prioritize direct sales has made news recently, it seems plausible they will seek some means to limit existing dealer inventory.
GM went through a dealer culling after the government bailout to strengthen the remaining stores. The Covid shock, it appears, may permanently cull inventory levels across the board and (optimistically) have the same end.
This is a great point. Any dealer who had surplus inventory heading into summer 2020 did really well on their margins I bet. Of course, not something you want to base your business around...
If you think of dealerships as dealers, i.e. market makers, it's precisely their business.
I think this is mostly true, for a decent chunk of buyers. And I think this is part of the reason why we've seen used car prices skyrocket. People who have the cash to buy a new car but can't find what they want on the new lot are buying whatever they can.
Someone who is willing to order a car and wait is more likely to look for a better deal if they can get it.
Also, what is the point of a dealership if you have to wait a very long time and have no negotiation leverage? They might find they regret their temporary boost of profits when it destroys them. Ford is selling EVs direct to consumer now, the writing may be on the wall for dealerships.
General speaking: in times of high-margins, manufacturers want to kill the dealerships to capture a larger slice of those margins. In times of low-margins (even negative net margins) the manufacturers want to force the dealerships to eat as much of the cost as possible.
https://www.roadandtrack.com/news/a40175990/ford-online-sale...
It’s about time OEMs fight back against dealerships.
Because the US has a law that prohibits direct sales and must be made through a dealership. Presumably some middle man bribed their way to creating that law
That's it, I'm moving to Europe.
1) Buy off-the-rack from a local Chevy dealer. For the first couple of years after a major revision, the dealers mark up the cars to ridiculous levels. You will pay out the nose for instant gratification. This used to be an issue for high-end sports cars only, but these days even a Honda Civic customer can expect the same treatment.
2) Order from a local dealer. You typically don't have to pay as much for this, depending on your relationship with the dealer. But it can take a very long time for the dealer to get an allocation slot from the factory, especially for smaller stores that don't sell many Corvettes. At the time they take your order (and your deposit), they may not bother telling you that they don't have an allocation yet. You could wait a year or potentially more.
3) Buy off-the-rack from one of a few massive dealers, typically out of state. The dealer's allocation is based on how many Corvettes they sold in previous years, so some dealers specialize in selling from inventory at MSRP or below to achieve the absolute maximize possible sales volume. You will have to drive the car back home or have it shipped.
3a) A subset of these buyers will use a local dealer to accept "courtesy delivery." This means that the car is custom-ordered from the out-of-state volume dealer and shipped directly from the factory to your local dealer for delivery for a relatively-low fixed fee. Local dealers are about as enthusiastic about this as you'd expect, and many will refuse to participate. These buyers save some money initially, but are low on the totem pole when it comes to scheduling service appointments and getting loaner cars.
For Corvettes in particular, the custom-order options can be combined with delivery at the factory/museum complex in Bowling Green. European cars are sometimes offered this way as well, where you get to drive the car around for a while before it goes on the boat.
Once the car is no longer the hottest new thing on the block, the prices come down for both custom orders and off-the-shelf deals. The same purchase/delivery choices are available, though. Almost everything said about the Corvette purchasing process above applies to new Jeeps and pickups nowadays.
Maybe they only do adaptive cruise models on Wednesday and wood trim on the third week of the month. Now to get both you have to wait a month and because the ship leaves in 2 weeks, now you have to wait for the next one.
Semiconductors are the same. Manufacturer lead times are, even in good times, long for many things because they don't hold stock to cover big orders. If you come along and order a million AD4242WTFBBQ-OMGXXX, one of dozens of variants of a chip, they don't have that boxed and ready. You'll have to wait until the fab is doing that variant again.
The problem now is that all the distributor stock that used to keep everyone going while the big orders were scheduled is gone, and the fabs are so slammed that the time to the next free slot is measured in years, not weeks. And that's if the fab is still making that jellybean part at all and hasn't switched to a higher-margin part.
For many other brands, your custom order goes to the factory when you make some small commitment.
In order to pull that off our lines have to be flexible. Some options require a special jig, so we have larger factories to put all the jigs near the line, and we allow time for the person at the station to get the right jig out and store it away when done. We could produce product a little faster if there was just one jig on the line, thus the smaller line could move faster (or more likely use that space for more stations), switching the jigs out monthly. It doesn't make sense for us to do that, but for Toyota is probably does. (I'm told Honda has automated the jig replacement so any line can produce anything - but this limits what they can make)
Yep. All the large car manufacturers, and maybe all of them large and small, have JIT supply chains. I didn't mean to imply that JIT couldn't support customization, since obviously others allow you to build custom, just that Toyota's reasons for not doing customization may be linked to their particular JIT choices. And not some other deciding factor.
It's worth noting that Toyota suffered least (or last, anyway) with COVID-related supply chain restrictions. Their JIT is a particularly fine-tuned machine. They are the inventors of it, are they not? I read somewhere that many, if not most, others' are a poor simulacrum of Toyota's, and they don't understand it really. Like the way that most people implement microservices, or big-A Agile.
Exactly. You can order whatever the hell you want from a dealer.
So many misinformed comments in these car threads, I'm skeptical people have any experience here.
And, in fact, many OEMs are moving in the opposite direction; they offer a couple trims, and that's what you get.
You've been able to do this in the US forever; you just might have needed to pay closer to (or even at) sticker (now I'm sure it's higher than sticker).
You go to the dealer and test drive, sit down and go over packages and finance then a couple weeks later your car shows up and they either deliver it to your house or you go and pickup.
I suppose I've also never spent over $30k on a car...
On the contrary, we recently added a 3rd car, and it ended up being a $4000 used Toyota Camry. My first choice would have been a Corolla or civic but none were available at a reasonable price, condition and mileage. Due to the well known rise in used car prices.
It's in good enough condition and meets all the requirements for something that's comfortable, has cruise control and working AC, wasn't in bad shape, and can be repaired and maintained economically. Now I'm optimizing for dollars per km driven and although I could easily afford to take out a car loan for a new Model 3, or similar, I have absolutely no intention of doing so.
At the purchase price of this car and its highway mpg, and driving around 14,000 km per year, even at the current fuel prices (or if fuel goes to $6.85 USD a gallon) there is no way that its $/km is going to be anywhere near as high as the TCO of buying a new Prius or Ioniq nevermind a fully electric car.
I have simply opted out entirely from the concept of buying a dealership new car or late-model car and will continue to spend money on things that are reasonably adequate, and my financial outlay and overall level of stress are considerably lessened. No more worrying about if it collects a rock chip in its front plastic bumper, or a ding in a parking lot, no more paying comprehensive insurance, no more dealership haggling and waiting lists, no more inventory problems.
Assuming you can afford to replace it on your own if you need to, this one really adds up.
Even if insurance went optional I'd still go fully comp, as the cost of a new car is not what I need if I'm already financially struggling due to injury
In the US you either have to have liability insurance or be very wealthy. Bill Gates has no need for insurance after all.
You are required to have liability and collision coverage in most states, but comprehensive is optional. People often drop it from their policies to save on the premium. I have tried doing that on one of our vehicles over the years but have barely realized any savings so I’ve ended up keeping it on the policy. Seems like others have fared better.
Personally, I’ve never driven a Camry and thought, “this is awful”, but rather “this is totally fine and wow, great mileage!” In a similar vein, its status as an abundant vehicle with many parts out there and being generally reliable are all similar and useful things I’d consider before buying a new washing machine or whatever.
I now drive a 2000 4Runner that has actually gone up in value from when I bought it 12ish years ago. I’ve had two people in the last two years drive by randomly and ask if I was selling.
One of my all-time favorite Onion headlines: Toyota Recalls 1993 Camry Due To Fact That Owners Really Should Have Bought Something New By Now
https://www.theonion.com/toyota-recalls-1993-camry-due-to-fa...
If you are struggling to build your self-worth through a car or think you need to spend $50k to get that, try fixing an old Camry yourself for dirt cheap, and then see how you feel. No need to fight for right-to-repair laws either, just buy a part anywhere and clean or replace it according to the manual, which is just a 1000 page PDF on the internet of every possible repair. (Although my next car will be electric, because of climate change. Sorry Camry.)
You can already buy random EV parts online. As automakers make more models and source more common parts for their cars to do this competitively, this aftermarket gets better and more useful. A fairly promising thing is the apparent popularity of EV conversions and home-brew EVs, so perhaps there will be some competition for e.g supplying full-on computer control systems with some serious capabilities. There are also more modifications people will conceivably want to do on their cars. I know someone whose petrol ute has a fridge under the canopy, powered by a solar panel on the roof and an extra battery. Nobody is out there drilling a hole in their iPhone to add a headphone jack, because it would be really bad, but you can do all sorts to cars without ruining the whole experience. The complexity and variability of what people want their cars to do leads to modifications and that demand will have to be met somehow. It's also the kind of strange demand that cannot be met by the big automakers alone.
As for reliability, I hope the market will continue to speak pretty loudly with their wallets on the importance of that. People care about it now, I have no reason to believe they'll stop.
In replay of the recent election in Aus.
There are a lot of high mileage Teslas out there. Most of Tesla's negative reputation seems to be people complaining about fit and finish (paint, panel gaps). The actual mechanical reliability seems to be quite higher than a normal ICE car. However EVs are still pretty new so long term data is still being collected.
http://www.truedelta.com/car-reliability
But Tesla still sells well for other reasons, so apparently they don't have to care about product quality.
The writeups of high mileage Tesla's that I have read have not mentioned very many repairs - and that seems to be the general consensus on the owner's forums.
Note that software updates are also considered 'recalls' on Teslas now.
one data point on a high mileage model 3 : https://electrek.co/2020/09/26/tesla-model-3-high-mileage-ex...
https://www.statista.com/chart/23586/average-reliability-sco...
Considering how many Teslas have been shipped, a postmarket community forming around the vehicles seems likely. I just don't know how successful it will be when the manufacturer is so hostile toward third party repairs and tinkering overall.
I don't doubt they are reliable cars, though. So are Apple computers and phones.
What I have come to realize though is that most people couldn't drive quickly in corners if their life depended on it.
And that there is nothing more satisfying than watching a Tesla or Audi become a small dot in the rearview mirror on a highway onramp or a switchback road, when the emblem on your trunk says "1.4 EcoFlex" and your bumper sticker says "Baby on board".
Sure, you'll get passed when the road straightens out again, but both them and me know that I've won.
It's a moving chair that gets me from A to B
Go out and actually drive the cars in this class and they're pretty much all the same. Honda build great cars, but let's not pretend you hop in an everyday Civic and it'll blow your socks off. They are very pedestrian.
We bought a Mazda3 because my wife didn't like the sight-lines in the Civic. YMMV.
This is a difficult sentence to parse. Shouldn't you want the opposite from a car?
Sudden acceleration is a contributing factor in many vehicle crashes.
Driver input causes sudden acceleration. Having access to more power is not an inherently dangerous thing. Poor driving ability is a dangerous thing - though I agree that more power can compound that danger.
I drive a 480bhp 1800kg car. It takes active involvement from me in multiple steps to "take off" or 'suddenly' accelerate, and when it does so, the whole car is configured to _increase_ its stability as its speed increases.
That said, if I were to aggressively accelerate when the road conditions are in excess of what the stability aids (and my fallible human skillset) can counter - which from experience is a high bar for modern DSC (oil, ice) - then I would crash and power would be a contributory factor. But from experience I can say that a small front wheel drive car will have 'let go' far sooner under those same conditions.
High-powered cars, by virtue of their expense, tend to have more comprehensive and capable driver assistance features both tech and mech (you're not going to find a limited slip differential on a budget super mini car)
Under-powered cars have trouble effectively matching carriageway and motorway speed in the short slip roads that are common in the UK. A 1 litre, >80bhp car is fine for city/town and village driving. It is not an appropriate vehicle for motorway or NSL carriageway driving. Anything that has no ability to out-accelerate a HGV maintaining cruise speed to join a motorway has no business being on the motorway.
That’s exactly what he meant.
That is luck not skill. Humans are not good drives and never can be.
> Stay focused on the task at hand and be responsible.
That helps. It would help some more if you would also get updated training - safety engineers have discovered a lot of things over the years that few people know.
This is a stretch. The better argument is that the best human reflexes can't react to others' stupidity with the speed and precision modern safety mechanisms can.
It's both. Even if an accident is the other driver's fault, there are plenty of cases where driving more defensively would have let you avoid it.
But yes, there's luck too. If you're sitting in traffic at a red light and someone drives into you, not a lot you could do to prevent it.
More importantly, the OP should not claim skill even if he has some: that leads to complacency. If he claims luck he is more likely to admit he isn't perfect and thus pay attention to changes in what he best practice for driving. What he was taught in drivers training 20 years ago assuredly has some things that we now know were wrong, and it didn't even cover some things we now know is important.
But, it also sounds like, some of the driver assist features aren't so good yet either ( reading many of the other comments in this thread )
Most notably this happens when I'm driving down the freeway, and the car thinks something is in front of us that isn't and randomly slams on the breaks.
It has also happened when other negligent drivers have started merging into my lane (where I am), and the vehicle slams on the breaks, against my better judgement of slamming on the gas to avoid the collision because it would have been safer.
My daily driver is old and has no security features, and modern rentals are a nightmare for exactly those reasons.
Also, what's with the newer cars randomly beeping at me to communicate instead of presenting an actual sentence of information? Almost all the time I have no idea why the safety features are engaging because they only communication is a beep of some kind, leaving me confused and taking my eyes off the road to look for some supporting message in the car's interface.
Only looking at injury data in the real world would show that.
It's my understanding new cars are not significantly safer than cars from 10 years ago.
How did you come to that? The new cars are new and there's no real world statistics for them yet, if you only go by real world data.
This may not be safer as in better crash resilience, but safer as in you have a backup camera, and side sensors for changing lanes.
What if technology in the newer cars (adaptive cruise control, forward collision warning, etc.) prevents injuries altogether?
It definitely increases the drag, but after spending a week driving at 70 the difference in mileage was almost unnoticeable. It helps that I have a small, aerodynamic car that's geared high instead of a truck or blocky SUV.
My overall trip efficiency maxing out at 70 was 31mpg, and 80 was 27.9mpg.
In dollars, the additional amount you pay to drive an ICE faster is considerable:
https://afdc.energy.gov/conserve/behavior_techniques.html#:~...).
"For light-duty vehicles, for example, every 5 mph you drive over 50 mph is like paying $0.18 more per gallon of gas (based on the price of gas at $2.63 per gallon)."
Even that is a simplification. Air resistance increases exponentially with speed, so the jump in resistance (reduction in efficiency) is much greater from 70-80 than from 50-60.
Also, gas is a lot more expensive now, so the additional $0.18/gal could easily be doubled or tripled at today's prices depending on where you live.
> It helps that I have a small, aerodynamic car that's geared high instead of a truck or blocky SUV.
According to consumer reports, even a very gas miserly Toyota Yaris loses 4mpg going from 65-75mph. It's probably double the efficiency loss if you go to 80mph. Can't cheat physics.
https://www.consumerreports.org/cro/news/2009/09/tested-spee...
That said. I did get rid of a perfectly good 2002 Camry to buy a Mustang Mach e about 14 months ago. It was pure indulgence and I'm still smitten. I try to take care of it, but don't park across 2 spaces an extra 200 meters away while at the grocery.
This would be a great thing. NPR ran a show last week about the benefits of switching to this model for the consumer in terms of products of all kinds, and it turns out that given this choice, the customer makes better, more ethical and informed decisions about the product and feels better about the relationship they have with the producer and manufacturer. It tends to create a better and more loyal customer over time as well.
I think any move that goes in this direction will be deemed a non-starter by incumbent industry even if it could lead to the good stuff you mentioned later on.
OTOH, it isn't possible for a dealer to keep all possible combinations of options on the lot. Even the largest dealers don't have that much lot space for one model (much less all models). This is why there are so many bundles: you chose package A,B,C and then color. However if people are ordering they may give the nod to a manufacture that allows them to unbundle choices, and this competition may force them to make lots of different options and thus lose the profit margin on lots of options that maybe people didn't want but it came with an option they demanded.
What I wanted was in a color not commonly stocked, with an unusual interior color, and the upgraded engine, with all the packages - but without a sunroof. That's a nearly impossible combo to find, my car is like 1 of 22.
I think you need some cars on the lot for people who can't wait 3-6 weeks for a vehicle, but I think you'd see more customers move to ordering, if it was an option.
Dealers AND auto makers don't like that because some people will place an order and then the next day cancel it. If the dealer instead puts them in a car that is "close enough" most people will keep the car even though it isn't perfect. They do lose customers like you who are very specific about what they want, but they gain more. (or so they think)
The pandemic made it so they'd actually take my business, we negotiated the purchase contract at the time of order, and I got it without all of the stuff I didnt want.. like nitrogen air, tint, and the 'paint protection' BS. I did have two minor quality issues - the rear AC vent trim bit was not fully seated, I fixed that myself, the other one is the gas door sticks on, why? no idea - the dealer has tried a couple things, I've found cycling the opener 2-3 times opens it just fine.
Why aren't dealerships just consignment stores for cars? That seems like it'd work out better for everyone involved. (And they could still follow "manufacturers can't sell direct" regulations, by having the dealership buy the car from the manufacturer just-in-time to resell it, once they've already got a signed contract from a buyer. And the manufacturer(s) they sell for could even extend them a line of credit to cover the float required to do that, so that they can operate on the same thin business model as regular consignment.)
Presumably because people prefer getting less money now to getting more money later. Also most dealerships essentially "flip" cars (like those people on HGTV flip houses) - they clean them up, do basic service, add a warranty of some sort and that gives them extra margin versus just taking a small fee for handling sale paperwork.
Honestly I'd hate to sell a car via consignment because there's zero incentive for the dealer to do anything with it. They might sit on it for months.
To be clear, I meant new car dealerships — the ones that are branded to a particular manufacturer brand (e.g. "Ford dealership", etc.) Why aren't those dealerships just consignment stores? It would stabilize a very cashflow-constrained franchise business, into something that's essentially just "making money to be a showroom" — which is exactly what those really are.
> Honestly I'd hate to sell a car via consignment because there's zero incentive for the dealer to do anything with it. They might sit on it for months.
Seems fine to me. Any consignment store is really just doing lead-gen: helping to arrange a contract between the buyer and the manufacturer (where they just happen to take temporary possession of the car in-between.) Sort of like a car real-estate agent.
The important thing to realize about consignment models, is that your customers aren't the people coming in to buy things. Your customers are the manufacturers, who essentially rent space in your lot to show off their products. If you don't work to sell their products, the manufacturers stop renting that space from you, and you don't make money.
Certainly, consignment stores aren't as motivated to move particular products. Especially particular high-margin halo products. But they are motivated to do volume — i.e. to hit their manufacturer/renters' revenue targets.
(Also, keep in mind that a consignment store can't really "sit on" consignment goods; those aren't their goods to sit on. If the manufacturer wants to rotate them out for other stock, they just go to the store, take those goods out, and put something (or nothing) else in its place.)
It wouldn't be better for the dealership when you take into the fact that they are a dying business that literally everyone (car manufacturers, clients, etc.) hate. The only thing that keeps them in business is laws that were passed so f()cking long ago that your grand parent were not even born yet. The justification at the time were valid, they were helping protect consumers and tried to create a "fair" market place amongst car sellers. That was back in the pre-internet and for some people even pre-phone era. when society changed and they became a useless parasite, they never tried to innovate or adapt to the new reality, they just doubled down on their hostile model.
There is no long term future for most of them, especially not with EV cars that require less maintenance. If there were no laws protecting them, most of them would be gone and car manufacturers would let you buy direct from them online. None of the crap they force you to go thought would be tolerated if you could just pull your phone in front of the sales rep and buy the exact model you want on the spot at msrp.
There is no evidence of this. Dealerships exist, and flourish, all over the world where no such business laws exist.
Their business will change and adapt, some dealerships will fail, but "everyone hates" them is a major exaggeration.
Since the dealerships generate so mush tax revenue, they have a great deal of political power and won't go down without a fight.
This is especially true for dealerships. Sure during a shortage dealerships are happy to sell limited inventory at much higher margins but in the long term that's going to eat into their bottom line. Financing alone often surpasses profits on the car itself. Then also fewer people will bring their cars in for scheduled maintenance and get their cars fixed during the warranty period. After that a lot of people get their cars fixed at less expensive 3rd party repair shops.
A family member worked in the industry for years and conveyed this to me, but it's also what the sales manager told me when I bought a new car recently: No one was happy. Salespeople made fewer bonuses hitting quotas and the dealership's long term profit forecasts were way down, even if current profit margins made short term profitability the same or slightly higher than usual.
This has become the thing to do if you want to avoid dealer markups. Just call around until you find a dealer that will honer MSRP and will ship to you, then do the deal with them.
"Nothing catastrophic happened to the dealer" only in a world where dealership employees don't count. My VW dealer had to lay people off, not enough volume.
>Dealerships hate carrying extra inventory because it costs money to finance the vehicles until they sell them.
Well, yeah, this is literally every single retail business anywhere. Who wants to carry inventory? The point is to turn it over ASAP. That doesn't mean the optimal level of inventory is zero.
It does if the customer will wait for you to produce the good for the same price (or better!) as the inventoried one.
It's really contextual. If your current car was in an accident, you will need a new one ASAP. On the other hand, if your current car is working okay, why not wait until you get exactly what you want?
What's driven me to pick from inventory is immediate need. In the past, I came across good deals in inventory that a dealer was looking to move; and I really needed to replace my car. (Car died, putting too many miles on a lease, car wouldn't pass smog.) Now, I've replaced cars because I was afraid they'll break down on me at some point in the indefinite future, so I just order a Tesla about a year or two before I think I'll need it.
Perhaps used cars will fill the need for people who just really need/want a car now?
Most dealerships near me that priced gouged had to change course pretty quick. I bought 2 vehicles during the pandemic, both at the same dealership, both at MSRP. I think most people who pay over either don’t know other dealerships will negotiate to MSRP, or they just really want a specific color, etc.
Twice, Ive gone in on Christmas Eve or New Years and make the guy wait around until he offers an employee discount.
I’ve also gotten a discount (5% under MSRP) for being associated with a university which purchases in bulk from the given dealership.
In one case I made the guy go into their system and show me I was buying it at cost to the dealership.
People just don’t know how to negotiate. I’d be sad to see dealerships go, I’ve saved probably ten thousand of haggling.
They do. It's called MSRP. You can walk into any dealer in Canada (and presumably the US) and pay it. The price is on the website or the car window.
Why do you care if other people are able to haggle for a better deal?
The reason I'm against it is because it means folks are going to get taken advantage of. In a lot of cases, it is the buyer.
Of course it would. Dealers have some flexibility in their margins. Just like you, they have a price below which they will not make a deal. If you offer too low a price they will simply say no.
This isn't rocket science; buyers and sellers come together at an acceptable price.
I'll add that at least one of these wasn't you haggling - you just happened to be associated with a place that gave you a discount. And you don't need dealerships to get such a thing.
That is dishonest. A dealer needs to make his pay. You took his time, they need to make money for it.
Of course it works out because dealers know that you know what they paid (edmunds, kelly blue book, and a few others I can't remember) will tell you the exact numbers, and everyone knows that. Dealers just have found other sneaky ways to get their money instead. It is people like you are refuse to allow a simple honest profit margin that force all the evil financing junk that dealers pull instead.
In the end, there were about $11k in "extras" and they low balled me on my trade-in vehicle. I ended up walking away.
I'm now wishing I put zero down on my last car, because it's looking like my loan is way cheaper than inflation is going to be over the life of the loan.
Would you have invested that money in something that is currently growing at least as fast as inflation?
But either way, the rate on the car note is lower than inflation, so I'd be ahead just by spending the cash on something else.
Of course in the end if you have options you need to run your own numbers. Things change far too often to give general advice.
Financing is usually profit shuffled off to the bank.
There are lots of dealers to buy vehicles from, lots of people to sell your vehicle to, plenty of alternatives to "add on", most of which are unnecessary, and lots of banks and credit unions to loan you money.
When you have alternatives and can use them at the dealer, you'll get dealership down on prices. Understand the incentives the dealers have (how they make money, especially extra money), understand their cost structure, etc. and you'll have even more bargaining power.
For example, you can often leverage financing to get the price down. The dealers get extra cash by bringing financing deals to their partners, so they might take a few hundred off the vehicle if you finance. Even if you want to pay cash, take the financing (make sure no origination fees or early payment fees) and pay it off before it accrues any interest.
I've also walked into dealers before with print outs of the same vehicle priced lower at other dealers and magically they become more flexible. I've ever tried this before where I didn't present this info and they let me walk out of the store, refusing to budge. Then when I came back with the info, they became more flexible.
The service departments pull this nonsense as well. I've negotiated service prices down 40% in the past and know that you can use things like recall repairs to get a better deal on repairs you actually need done (if you do x repair for $y, you can do this recall repair as well).
I think dealers are an extremely bad component of the vehicle market, but eliminating them will lead to people who can exploit the system to pay more. It will be an overall net benefit for the market though.
I looked at my itemized bill and I had actually paid $200 for a phone cable.
Oh and one dealer had mandatory financing.
Oh, this explains it. I spend time in Wyoming. There appeared to be, last summer, a solid business of people buying cars across the border, driving them to Montana and/or Wyoming, and then re-selling them used.
I thought it was just the used car market being weird, though that didn't explain the Canada bit. This does.
This entrenched way of doing business may start seriously hurting their bottom line if Tesla and others can scale the direct to consumer model.
I think the sooner all car makers move DTC the better.
Now, if you can get the online order model to work with really short lead times, this might gain more traction than usual. E.g. bring me a car to test drive, and very soon -- today ideally. Then I order the car, and you deliver it to my house on a trailer within a week.
But months? No way, this is how you tell customers to go somewhere else.
It may not be so much that they want to, but it is apparent that Ford is struggling to figure out how the dealership fits in an EV world, where your customers aren't constantly funnelling in for oil changes. The ICE model allows the dealership to make a sizeable portion of their income from the attached repair shop, but much of that shop work goes away with EVs. This will bring higher commission expectations and Ford could quickly find their cars priced out of the market from that when competitors aren't establishing dealer networks.
There is a bit less maintenance without an ICE, but not much.
When exactly is Tesla going to offer an economy car? With their margins they could make the Model 3 priced like that to win market share before other automobile companies catch up. I don't follow them or their product releases but haven't seen anything in the press about that direction of the company.
You've answered your own question: their high gross margins have more to do with accounting differences with OEMS than actual finances. Making cars is expensive.