I am personally not a fan of Tesla as a vehicle, but I admire the business model of buying directly from Tesla. Stealerships are a drain on the consumer. All that land they own can be used for productive economic activity or housing.
No it can't. You still need places where cars can be repaired as well as storage for parts/cars inventory. The only way you reclaim some land is if service gets worse.
Edit: For example, Tesla sells direct to consumers but there's still a Tesla "showroom" in my town. In terms of footprint/appearance it's basically a dealership. So where are the land savings?
That said, still need somewhere to buy/sell used cars.
You probably aren't going to have 10 Ford dealerships in town all selling the same models of cars. That's where the space savings comes in.
As for parts/service, that also gets more streamlined as you aren't likely to have the audi/ford/dodge dealerships and instead just the 1 ford manufacturer in town.
So do we want competition, or not?
The competition is that besides ford there's going to be a GM, stellates, and Audi lot (probably).
If we want more competition, we get it not by having dealers competing over who can screw you the most with the best hidden fee, we get it by adding more car manufacturers.
The idea was "if you buy a VinFast" from vinfast and they exit the market, you're 100% hosed, but if you buy a VinFast from "Karl Marx VinFast and Fiskar Dealerships of North Idaho" you can go back and talk to KMoNI Inc about your new car.
The dealership model was established a very long time ago back in the cambrian explosion era of car manufacterers and people were buying cars from companies like Auburn, Cole, Crow, Davis, Dixie, Durant, Elcar, Grant, King, Kline, Lafayette, Kurtz, Marmon, Mercer, Overland, Peerless, Pilot, Roamer, Saxon, Stearns, Velie, Wescott and Winton [1] and then the company would vanish and there would be no support.
Towns don’t all need one Unilever store to sell your Ben&Jerry’s, your Dove body wash, and your Hellmans Mayo, then a separate Procter and Gamble store that sells Tide, Pampers and Bounty.
Why can’t you just get all the main car brands at Costco?
They should have the option, sure.
But what difference do you think this makes in reality? The process ends up being the similar.
>but I admire the business model of buying directly from Tesla
A lot of people don't want to buy a $40,000+ item online. Tesla understands this, which is why they opened "showrooms" to have real people walk you through the process.
Oh, and let's not get started on surprise repair costs from Tesla, as if they are immune to that ridiculousness.
Saying "no stealerships" (so clever) doesn't change the fact that there's a manual process involved with buying a car.
The difference is the price listed is the price you pay. There's not an environment where the dealer is injecting whatever BS fee or piss poor financing they can to milk out every extra cent from the customer.
The manufacture is incentivized to sell these cars at the advertised price.
What does the "advertised price" mean, when companies like Tesla can, and do, change it on a whim? Is that really better?
No one is stopping you from walking into a dealership and paying sticker/MSRP.
My personal experience is that they honoured my order and delivered a vehicle superior in every metric but "turning radius". (Which has a far higher price if ordered again on my delivery day)
Every company in every industry modifies products and pricing? See e.g. "shrinkflation"
But there isn't a middleman with big facilities and staff to feed, so the resulting product can be cheaper, with the process being streamlined because the middleman's job is to milk you for all they can, meanwhile the original vendor just wants to sell their product.
I think the main problem with dealerships is the government granted monopoly. If a dealership is in a region, most states prevent any other dealership from setting up shop in that region. That's why so many of them are passed from father to son like a dynasty. No competition at all -- and they act like it.
Restore competition and the "stealership" aspect should go away.
Tesla doesn't have independent dealerships and it's quite easy to test drive their cars before you buy.
> They have considerable political influence and have lobbied for regulations that guarantee their survival and profitability. By 2010, all US states had laws that prohibited manufacturers from side-stepping independent car dealerships and selling cars directly to consumers. By 2009, most states imposed restrictions on the creation of new dealerships to compete with incumbent dealerships.
But instead we ended up with a system where car dealerships basically own local lawmakers and got laws passed that not only prevent the manufacturer from competing with them, but make it really hard for people to start new dealerships to compete with them. And the experience shopping for cars at a dealership is absolutely terrible, which shows you that they don't feel any pressure to compete.
For example, Games Workshop doesn't like when 3rd party retailers charge less, but it's easy to find 3rd party retailers that charge less than Games Workshop on their website.
In response they've increasingly made certain models online only and its always at full markup.
There are practical reasons for this. People buy expensive items and expect to be able to get those items maintained and serviced. If the business was cutthroat, that could be more difficult. I don't want my dealer going bankrupt, frankly.
But the idea that dealerships aren't out there competing with each other is insane. Have you ever actually bought a new car?
>And the experience shopping for cars at a dealership is absolutely terrible, which shows you that they don't feel any pressure to compete.
Just the complete opposite experience I've had in my lifetime of buying new vehicles. And the idea that they don't compete is an outright fabrication. You have an incredible amount of leverage buying a car, and you can shop quotes around.
And use them openly against each other to get a better subsequent quote.
I once had the salesman turn his terminal around and say to me, "Have a look. By the time we pay the guys to detail and prep the car, we will make $700 off this sale. I have no more room."
Carmax was fairly OK in comparison to my experience with dealers but still took like 8 hours.
And the idea that they don't compete is an outright fabrication.
If I want a Mazda I can get a quote from Joe Cardealar or I can drive 50km and get a quote from his brother Steve Cardealar.
So, more competition is bad for the consumer?
It's somewhat telling that Tesla has a bad reputation for delivered quality, and they don't have a dealership network that does final QA.
Of course, dealerships also like to install unnecessary options while they're doing the other parts of dealer prep, so it's a mixed bag.
Indeed, a good dealer will spend several hours checking out the new arrivals and then detailing them to remove the transport dirt. AFAICT Tesla doesn't do this as well themselves, both my Model 3s had some fairly obvious defects that took me under a minute to spot.
Still, I think there is something to be said for independent dealerships overall for service quality. Trying to get a Tesla serviced is still something of a nightmare. In comparison the service departments of dealerships have are much more robust.
Usually, your soft drink is manufactured from the brand's syrup by a bottling partner, which is then distributed to a retailer, who you buy it from.
e.g: https://www.coca-colacompany.com/content/dam/company/us/en/a...
But in this case, at the point of retail it makes no difference. The store can sell as many different brands as they want. The problem is not the middlemen, it's the exclusivity arrangements that disincentivize brand competition.
e.g. I drank Coke products in my undergrad because of my school's exclusivity agreement.
Tesla has service issues, I'm not sure that they're related to their lack of dealerships though.
Dealers actually don't know much about their older cars. Try to bring for example a 1990's era (or really anything more than 10 years old or so) Mercedes to a dealer for service, none of their techs have any idea what it is, unless they happen to have an old guy.
Dealership shops are trained and reasonably competent working on newer stuff that's under warranty coverage. Older than that, you can often get better workmanship and cheaper prices with an independent.
It’s wired that the country of free market has all these protectionist laws that do not exist in many ex-soviet evonomies
It's a common misconception, but the US actually has a mixed economy.
They literally come to my house and fix things, it's incredibly easy for me, but I have four service locations within 30 minutes drive, so may not be the common experience.
This feels like a reflexive response to the mention of the word ‘car dealerships’, not something that will lead to a discussion of the substance of this article.
There are for the politicians who benefit from the lobbying the dealerships do!
I agree with you though, I just don't love the entire model of dealerships being that some local person just wants to run their own business and this is the easiest. So little brand or experience consistency across dealerships and so much perception that the person benefiting most from your transaction is the dealership itself. I have zero interest in putting any money in some locals pocket for a car transaction, I'd really rather it all just go directly to Toyota and have Toyota keep a more consistent experience across the country.
The last vehicle I purchased was certified preowned and I went through several models before landing on one - much of my decision was based on how the vehicle handled to me.
As an average car consumer, I have done many test drives and gotten nothing out of it except the car salesman looking like he did something.
I will buy a reliable car sight unseen like I bought my big screen t.v.
The other thing is that some "car people" that I know will rent a car before purchasing it because the test drive is far too superficial for them.
Something led you to buy a Sentra, though, a car that is middling in its class. Why?
"my mind was already made up based on price/features"
and
"I'm more-or-less just looking for something that gets me where I need to go safely."
I know that "car guys" can't fathom this but I've driven a LOT of car models (as I've rented a LOT) and they are (mostly) the same to me; I consider cars almost a commodity. I wouldn't even know how to compare vehicle "handling."
That claim seems disingenuous, in order to serve up a point.
You most certainly would be able to differentiate and compare.
Your point wouldn’t stand though would it?
Correct. I've also been driving for a quarter of a century.
>That claim seems disingenuous, in order to serve up a point.
>You most certainly would be able to differentiate and compare
No I wouldn't. I swear to you I'm not lying. A car is a car to me. There are different sizes and some are a bit more comfortable than others but they are mostly the same to me. I don't even know what "handling" even means, I've never had a car behave unexpectedly when turning the wheel.
In sure I would notice a difference if I was racing or something, but I'm not, I'm just going to the god damn grocery store.
Name 1 or 2 other things you buy "sight unseen" that are remotely close to the cost of a new vehicle.
>I will buy a reliable car sight unseen like I bought my big screen t.v.
If you have zero preference for the multitude of ways even similar cars can vary, you aren't an average car buyer. Most people care about these things, be it sight lines, headroom, where the chargers are, driving dynamics...
That question cannot be answered, we all know that nothing is comparable to that price in an average household's shopping list.
But a few years ago a shoe purchase was in store only but a month ago I bought a new pair online. Because I knew that I could try it and return it easily.
Luckily, I didn't have to return.
I wish I could do the same with cars.
For my car shopping, I've usually been locked into a model before I visit the dealer/private party, but if I test drive a car and it drives like some of those rentals, I'd be back to looking at other things. I also just recently test drove a lower trim / different engine/transmission configuration vehicle than I wanted, because that configuration was available to test drive and the desired one wasn't... and I was pleasantly surprised by the drivability, so I broadened my search (helps that the configuration I wanted is more expensive and less produced; it's easier to compromise towards something that I might be able to buy for less)
A few years back I was convinced I wanted a certain model Hyundai (Elantra), researched the hell out of it, figured I didn't even need to test drive as I had owned the previous model. Got to the dealership, sat in the drivers seat and found there was no headroom. I'm not that tall, but the new model was so "aerodynamic" (swept back windshield) that it felt claustrophobic. I bought another model (Sonata).
The key difference that the place is owned by the car company instead of rich middlemen that engage in regulatory capture, add markups that don't go the manufacturer and degrade the experience.
https://caredge.com/guides/how-did-car-dealerships-become-so...
This is really such a classic clueless HN comment from someone who both doesn't understand business and hasn't taken the time to understand why things are done the way that they are. (My comment doesn't mean in any way that things can't and shouldn't change and/or can't be improved. But seriously calling them in part 'stealerships'. And 'there is no reason'. Thanks for having it all figured out.
It seems like the EU has reined in the worst excesses of dealerships a lot, and allows direct-to-consumer. Maybe the US will follow suit in a few decades.
But as those manufacturers and dealers grew, they then had the resources to operate at broader geographies, and dealers lobbed for franchise laws to "protect local businesses", etc.
Hard disagree. Shitty car dealers should be a relic of the past, sure, but the business model is sound. It's basically like every other product you buy. How often are you buying from the manufacturer? Almost everything you buy from a store. That's what a dealership is.
Inventory is nice to have for all the same reasons you are happy the home store has inventory. And a built-in service department with a good parts and knowledge source is pretty important for a big expensive device which requires maintenance and that you're going to keep long enough for it to break a couple times.
The laws protecting them, I do think should be repealed. But I don't see the business model going anywhere. And I am on my second Tesla, so I see the alternative. The buying experience is easier, sure, but otherwise it's all the same shit under a different name. And some dealers can provide the same experience, frankly. In the future all of them will, or they will go out of business.