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Comment by venus | Hacker News Reader

The dealers can grasp for whatever reasons they want, but I have no sympathy whatsoever. They're rent-seekers, pure and simple, with no value add at all. Half the time they don't even have stock!

> "Buying an iPad is not buying a car," says David Hyatt of the national association

Well, it should be.

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> They're rent-seekers, pure and simple, with no value add at all. Half the time they don't even have stock!

This isn't true. While dealers are slimy and have miles to go, there's still a consumer need to (a) a place to see/touch/drive a vehicle and (b) go in for service and repairs. You can't simply fix this with manufacturer-owned stores because the capital cost is so high. Major manufacturers like Ford and GM have over 3,000 dealers in the US. Maintaining that kind of network is something that dealers can't afford. Tesla only has a few dozen service centers right now, and they're centered around high-population urban areas with wealthy customers.

I'd like to see franchise laws change to encourage competition in the space, but I think we still need dealers in some form or another.

"Major manufacturers like Ford and GM have over 3,000 dealers in the US. Maintaining that kind of network is something that dealers can't afford."

I don't see why 1 company couldn't maintain that many locations. Walmart has 10,857 stores[1]. Over 4,000 in the U.S. and over 6,000 internationally. I would argue that maintaining a single Walmart store is more difficult than maintaining a dealership and yet they're able to make it happen.

[1]http://stock.walmart.com/financial-reporting/unit-counts-squ...

And WalMart's core strenghs are store management and discounting, while auto manufacturer's core competency is to build and market cars, not to deliver and operate dealerships. Walmart also has an army (2 million strong) of people working for them, most of whom are working near minimum wage

Exactly what I wanted to say. WalMart doesn't make any of the products they sell. They can focus on making money selling stuff, and manufacturers can focus on making money making stuff.

I could see Tesla one day letting a company like Amazon sell the cars and handle the logistics of delivering them to the customer.

My point was to show that it's possible for a company to handle massive infrastructure with thousands of locations (dealerships).

If you want to talk about core business competency, that's another issue. I don't think it's a leap to think a car manufacturer could also have a division that sells the vehicles.

Currently, the dealers buy the vehicle from the manufacturer, so the manufacturer isn't holding onto large amounts of inventory. I suppose it's possible to restructure the business to operate in a way that can take on the large inventory and long turnover, but probably not the current companies in their current forms.

"probably not the current companies in their current forms."

Changing the current company models, in their current forms, is exactly what Tesla is trying to do.

exactly. If dealers are profitable today, then an auto company running the whole show can be just as profitable if not moreso.

Why do there need to be laws specific to that? Aren't companies like Tesla capable of deciding if they need more or less service centers, in what locations and what model is best to run them?

Unfortunately the argument that in a free market, what maximizes profit is socially optimal, is not taught in schools, and alien to many people.

It doesn't help that in public debate, this argument is usually espoused by people on the right who mix it in with other unrelated arguments. So people end up thinking that if they support the free market, they also have to support cutting all welfare.

Tesla is exactly doing that. If you think that is a guaranteed failure, I take it you are short on their stock?

Because obviously we need not institute new laws if basic economic reasoning can bring about the change.

> Tesla is exactly doing that. If you think that is a guaranteed failure, I take it you are short on their stock?

Relax, no need for accusations or jumping to conclusions. I think Tesla will be a terrific company and I look forward to owning one someday.

I just don't think it's reasonable to assume that just because Tesla can do it, everyone else can and should do it the same way. If you were Alan Mulally, CEO of Ford, would you do exactly what Tesla is doing? Would you close the 3k franchised dealerships and install manufacturer-owned ones instead? How would you finance that much real estate, inventory, and employees? Or would you close down a large portion of the dealers and go with fewer? How would you service the millions of Fords sold every year?

I guess I missed the part where someone said every other automaker should shut down all their dealerships and do it Tesla's way instead.

We're all mostly upset that the dinosaur automakers are trying to dictate the terms of Tesla's business.

There's also no reason to think Tesla will always operate this way. At some point, if they continue to grow, it is no longer practical to own and operate all the sales and service facilities.

Believing a company is guaranteed for failure and shorting a stock do not always go hand in hand.

They may grow using capital on hand which temporarily increases the stock price. They may have trouble with expansion as they move into new territories which is a long way away. Failure isn't always immediate.

Also "The Market Can Remain Irrational Longer Than You Can Remain Solvent"

The above is a general statement about company failure and shorting a stock. I personally believe that Tesla is the future of the car industry and it's likely to be a successful company for the foreseeable future.

What's funny about this is in San Diego guess where the Telsa dealership/store is? In the local mall, right across from the Apple store. There are always a ton of people in there looking at the car (yep, a "dealership" with just one car). I think it's great and gets a ton of people familiar with their product that otherwise wouldn't be.

That's a terrific place to set up Tesla showrooms. Apple has done all the legwork in figuring out where their target demograhic is, and Tesla can piggyback on it, like what Taco Bell does vs McDonalds. (considerable overlap between Apple customers and potential Tesla customers)

Same thing in Bellevue, WA. I would argue though that it isn't about malls with Apple stores, but rather it is about Malls with high-income shoppers of which both Apple and Tesla want to be in.

Can't upvote this enough. I'm so sick of the constant haggling needed to get a good price on a car, getting quotes from a dozen dealers, and all the trouble with dealers during service.

Looking forward to the day when consumer gets the same best price from manufacturer owned stores everywhere.

This also puts the universe of consumers on a level playing field. No longer will the loudest, most ruthless negotiator customers get the best deals. Such equality would be a welcome change.

> They're rent-seekers, pure and simple, with no value add at all. Half the time they don't even have stock!

That's a major oversimplification. Car dealers can provide a lot of value to individuals looking to purchase a vehicle, both at the time of purchase and after the fact via test drives, financing, and discounts for future maintenance at their service centers. There are plenty of shady car salesmen that take advantage of vulnerable people, but that should not negate the benefits that many dealerships provide.

The stock issue is tricky, as many local dealers can't afford to carry a wide range of models and configurations. Stopping by the local dealership looking to buy a specific model vehicle same-day may result in disappointment. However, dealerships are very good about acquiring a vehicle that you are interested in purchasing. All you need to do is ask.

That being said, I agree with you that buying a car should be more similar to buying an iPad than it currently is. There are ludicrous laws that stifle innovation in the vehicle purchasing process, such as the Massachusetts Franchise law 93B[1] that prohibits manufacturers from owning dealerships. I think Tesla's vision[2] for first party dealerships and vehicle distribution is a step in the right direction.

[1] http://www.malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/...

[2] http://www.teslamotors.com/nl_NL/blog/tesla-approach-distrib...

"Car dealers can provide a lot of value to individuals looking to purchase a vehicle, both at the time of purchase and after the fact via test drives, financing, and discounts for future maintenance at their service center."

none of those things are exclusive to dealers for any reason other than the law requires it. a manufacturer-owned store could provide the same (or better) service in all cases. they add no value above and beyond what a first-party dealership would provide.

If you think they create value, then why not have the market validate that?

It's the same issue over and over. Just because you did work does not mean it is worth anything.

EXACTLY.

Far too many people are trying to cling to the old method of purchasing a car as if it is something that was efficient, cost effective and transparent.

Car dealers can go rust in hell.

What do I want - I want to customize my car online and buy it for a known price and have it exactly as I expected to cost.

I also want to never put another penny toward gasoline purchases. Period.

GM sort of tested this approach with Saturn. Custom ordering online wasn't a reality then, but the no-haggle pricing and a generous (30 day?) no-questions-asked return policy were part of their approach, initially. Consumers generally liked the Saturn buying experience.

What you described is exactly how I bought my Model S.

I will never go back to buying a car from a dealership. Ever.

Here we have what I suspect is the real reason dealerships are scared.

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