[HanksHemi]

Look I could have missed this in an earlier post/thread.

I watched several vids online and YouTube discussing this topic. You will find page after page of this topic on any search engine you choose, Bing-Google-Duck Duck Go etc. Some of the arguments/discussions sound reasonable. The most logical point seems to be manufacturers simply cutting out the middle man in the transaction (dealers) and pocketing the cash. Some were quick to point out delivery centers and service facilities will replace full service dealers. A very broad and deep conversations going on. Ford apparently is planning to sell all E card direct with no dealer involved. State laws are changing to make this happen and in states where no laws are banning plans seem to be moving forward.

What say you?

 

[valiant67]

My bet is the dealers have more clout than the people speculating on their demise think. And there is the franchise contract that would have to be canceled (or bought out).

 

[06PTElectricBlue]

Like everything else, car buying is, or already has, transitioned to online.

You can go online, play around on the manufacturers website, and pick and choose the vehicle you want.

When I ordered my '93 Ford Ranger STX at that time I had taken the dealership brochure, and picked the other individual items that I wanted on the vehicle. I then went to a couple dealerships before I found one that would order what I wanted.

Many states have laws preventing direct-to-consumer auto sales.

But then there are also several states that allow Tesla to sell direct-to-consumer.

IMO, Tesla should be treated no differently and should have to play by the same rules as everyone else.

 

[valiant67]

Like everything else, car buying is, or already has, transitioned to online.

You can go online, play around on the manufacturers website, and pick and choose the vehicle you want.

When I ordered my '93 Ford Ranger STX at that time I had taken the dealership brochure, and picked the other individual items that I wanted on the vehicle. I then went to a couple dealerships before I found one that would order what I wanted.

Many states have laws preventing direct-to-consumer auto sales.

But then there are also several states that allow Tesla to sell direct-to-consumer.

IMO, Tesla should be treated no differently and should have to play by the same rules as everyone else.

Tesla is different. They don't have legacy franchise agreements to deal with. It isn't just state laws requiring a dealer to sell you the car.

 

[Dave Z]

Right, and I think states usually do allow one company owned dealership.

 

[06PTElectricBlue]

Even though Tesla's are now manufactured in Texas, you can't buy one in Texas as Texas is upholding the auto franchise law.

"However, there are several states where the matter is settled—and Tesla is required to sell cars through independently-owned dealership franchises. These states are Texas and (more recently) New Jersey. Arizona used to be on the list, but the law has since been removed.

Tesla has several showrooms in Texas. These are located in Tyler, Southlake, San Antonio, Plano, The Woodlands, Houston, Dallas, Fort Worth, El Paso, Corpus Christi, Olmito, and Austin. But these are just galleries, and you can't actually buy a car at a gallery. They can't discuss the price, but they can show you around the car.

That's what the law really dictates. Tesla can't sell you a car at one of its own showrooms. Instead, it can sell you a car remotely or online and deliver it to a service station, or you can drive out to the out-of-state dealer and pick it up yourself.

That way, Tesla isn't 'really' selling you a car directly and delivering it to you in the state. They're selling you a car out of state and shipping it to a service center, which just makes it available for you to pick up. It's not delivered according to the law."

Where Are Tesla Cars Sold? | CarShtuff

Tesla doesn't use dealerships, which makes getting ahold of one of their cars difficult in some states. So, where can you get a Tesla?

www.carshtuff.com

 

[Dave Z]

Really, for any company that's firm in its financials, that's the way to go. There are some superb dealerships, but most of them ... not so much. 'Course if you have lousy management it won't help.

 

[Powdered Toast Man]

My bet is the dealers have more clout than the people speculating on their demise think. And there is the franchise contract that would have to be canceled (or bought out).

YEP. Tesla has been fighting for direct sales for well over a decade now and they're still only part way there. The Dealer's Associations are a MASSIVE political lobby so good luck getting laws changed.

 

[06PTElectricBlue]

YEP. Tesla has been fighting for direct sales for well over a decade now and they're still only part way there. The Dealer's Associations are a MASSIVE political lobby so good luck getting laws changed.

Actually, there are a few states where the laws have been "modified" to allow Tesla to circumvent the franchise model:

https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes

 

[HanksHemi]

I know in SC years ago we had "tent" sales in mall parking lots. Was a big success for the dealers and the malls. Then someone well.....let me explain their situation using physics. What would you be if you were attached to another object by an incline plane wrapped helically around an axis? Yes he screamed . Turned out away from the dealership they could get creative with just about everything from prices, financing and beyond. Then the AG stepped in. Turns out there is/was a law that prevented dealers from doing business off site. The tent came down and sales ended at the malls, the fairgrounds and all large empty sites. The dealers desperate to recover big bucks lost from year over year sales put up big tents, gave away food, music, clowns, balloons etc at the dealership but alas it was not the same.

 

[Powdered Toast Man]

Actually, there are a few states where the laws have been "modified" to allow Tesla to circumvent the franchise model:

https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes

That’s why I said part way.

 

[06PTElectricBlue]

That’s why I said part way.

But they shouldn't have been able to get part way, they should have to follow the same rules as all the other car manufacturers.

But the thing is, if the franchise laws weren't in place, would the big auto makers really want to sell direct-to-customer?

 

[Powdered Toast Man]

But they shouldn't have been able to get part way, they should have to follow the same rules as all the other car manufacturers.

But the thing is, if the franchise laws weren't in place, would the big auto makers really want to sell direct-to-customer?

It would be an interesting way to "fix" the dealer network. By having corporate stores they basically could eliminate the problems of essentially having all of their customer interaction and care being handled by third party contractors.

 

[LeonB]

Vehicle makers would love to have control in the USA on final prices, reduce the number of sales outlets, all to increase profits and reduce the hassles of franchises by eliminating them. Tesla has maybe 100 direct sales outlets in the USA. Toyota has 100's of fewer dealers in the USA than each of the big 'USA 3' of Ford, GM and CDJR which means far less overhead costs to Toyota. A Toyota dealership site has the largest number of vehicle sales in the USA.

We have seen 1000+ fewer 'USA 3' dealership franchises since 2000, closed due to a number of reasons. Shifts in the market to Japanese and Korean brands. Shifts in shopping via the internet, wanting to avoid the hassles of buying the current model presents. Less inventory needed. Poor management, violations of laws or franchise agreements. Newer generations of families that own dealerships not wanting to continue in a business that is very volitale. Lack of capital for stock, facilities and staffing. Terminated as surplus to need, to reduce overhead costs, have more control of pricing and operations. I doubt Toyota has closed far fewer in proportion. 1000's of dealerships are now part of national and regional ownership groups like AutoNation and Penske. The Pandemic with significant reductions in inventory vs. demand has also suggested the need for fewer dealerships.

The future of a huge shift from ICE's to EV's will likely mean fewer dealers will be needed but still a need for service and parts facilities in reasonable distance from customers for continued ICE's and even for EV's. Vehicle makers are tightening up the number of parts made by and service information to 3rd party, independent shops. Of course the franchises owners will fight to prevent the end of exclusivity of dealerships for obvious reasons.

What we may see will be fewer but larger dealerships in 'suburban' areas of the USA, slightly smaller reductions in some rural areas as populations decline in some of them, more dealerships in control by national and regional groups and eventually to vehicle makers. I suspect the number of dealerships for the the Big US 3 will be cut to that of Toyota. More vehicles will be 'built to order', less inventory on lots. That will mean more sales at MSRP, hopefully fewer added 'fees', lower overhead costs to vehicle makers and dealerships. Used vehicle sales will still continue to be major part of dealership business but mainly concentrating on 'certified' models, shifting less desirable trade-ins to wholesale or captive separate used lots.

 

[68RT]

It would be an interesting way to "fix" the dealer network. By having corporate stores they basically could eliminate the problems of essentially having all of their customer interaction and care being handled by third party contractors.

And lose all local influence which can support local activities. Many dealers support local parades, sports, civic activities.

 

[codypet]

And lose all local influence which can support local activities. Many dealers support local parades, sports, civic activities.

I wonder what percent of that is true. In my city it feels like Napelton, AutoNation, and a handful of other corporate companies own the dealerships here. Noone is local. When I lived in Raleigh, I know Hendrick and Penske owned a bunch as well. I'd like to know how many dealerships at this point are still "local local" like back in the 60s-80s.

 

[valiant67]

I wonder what percent of that is true. In my city it feels like Napelton, AutoNation, and a handful of other corporate companies own the dealerships here. Noone is local. When I lived in Raleigh, I know Hendrick and Penske owned a bunch as well. I'd like to know how many dealerships at this point are still "local local" like back in the 60s-80s.

Even many dealerships with a local family name on them are part of a large corporation.

 

[cgseller]

I have found that every time I used a "dealer" that they provide no added value. The person knew less about the vehicle than I. The person ordered the parts wrong. The person order duplicate of parts that were standard. The person knew less about the order status that I did. I realize I'm not maybe the average Jane (thus I'm here)

I have not had to emergency replace a vehicle though - due to crash or fire. So, there is the use case for I need a car and I need it now. For those cases, you will need some kind of inventory or "loaner" system.

Compromise. Have showrooms with limited inventory. Showrooms offer entertainment, food, beverage and make them more of an event than a dealer. You will cover costs with the markup on entertainment and negotiate with OEMs to offer incentives for sales (like the free pillow for temperpedic if you buy though a store) or for storage of inventory vehicles (instead of the other way around where dealers have to buy and then insure on lot).

Dealers do not make a lot of money on new car sales, usually a thousand or so dollars (recent gouging notwithstanding) . The money is in used cars, services, and extras extras extras.

Let's also remember plant scheduling is hard when you have order variability. Logistic planners who do that for a living can probably weigh in more here.

 

[06PTElectricBlue]

Vehicle makers would love to have control in the USA on final prices, reduce the number of sales outlets, all to increase profits and reduce the hassles of franchises by eliminating them. Tesla has maybe 100 direct sales outlets in the USA. Toyota has 100's of fewer dealers in the USA than each of the big 'USA 3' of Ford, GM and CDJR which means far less overhead costs to Toyota. A Toyota dealership site has the largest number of vehicle sales in the USA.

We have seen 1000+ fewer 'USA 3' dealership franchises since 2000, closed due to a number of reasons. Shifts in the market to Japanese and Korean brands. Shifts in shopping via the internet, wanting to avoid the hassles of buying the current model presents. Less inventory needed. Poor management, violations of laws or franchise agreements. Newer generations of families that own dealerships not wanting to continue in a business that is very volitale. Lack of capital for stock, facilities and staffing. Terminated as surplus to need, to reduce overhead costs, have more control of pricing and operations. I doubt Toyota has closed far fewer in proportion. 1000's of dealerships are now part of national and regional ownership groups like AutoNation and Penske. The Pandemic with significant reductions in inventory vs. demand has also suggested the need for fewer dealerships.

The future of a huge shift from ICE's to EV's will likely mean fewer dealers will be needed but still a need for service and parts facilities in reasonable distance from customers for continued ICE's and even for EV's. Vehicle makers are tightening up the number of parts made by and service information to 3rd party, independent shops. Of course the franchises owners will fight to prevent the end of exclusivity of dealerships for obvious reasons.

What we may see will be fewer but larger dealerships in 'suburban' areas of the USA, slightly smaller reductions in some rural areas as populations decline in some of them, more dealerships in control by national and regional groups and eventually to vehicle makers. I suspect the number of dealerships for the the Big US 3 will be cut to that of Toyota. More vehicles will be 'built to order', less inventory on lots. That will mean more sales at MSRP, hopefully fewer added 'fees', lower overhead costs to vehicle makers and dealerships. Used vehicle sales will still continue to be major part of dealership business but mainly concentrating on 'certified' models, shifting less desirable trade-ins to wholesale or captive separate used lots.

I had a great CDJR dealership that did a lot of work on my PT, had a great Service Writer, Service Manager and tech that I could deal with.

Then they sold out and become part of AutoNation.

Hasn't been the same since, and I no longer do business there.

 

[68RT]

I have found that every time I used a "dealer" that they provide no added value. The person knew less about the vehicle than I. The person ordered the parts wrong. The person order duplicate of parts that were standard. The person knew less about the order status that I did. I realize I'm not maybe the average Jane (thus I'm here)

I have not had to emergency replace a vehicle though - due to crash or fire. So, there is the use case for I need a car and I need it now. For those cases, you will need some kind of inventory or "loaner" system.

Compromise. Have showrooms with limited inventory. Showrooms offer entertainment, food, beverage and make them more of an event than a dealer. You will cover costs with the markup on entertainment and negotiate with OEMs to offer incentives for sales (like the free pillow for temperpedic if you buy though a store) or for storage of inventory vehicles (instead of the other way around where dealers have to buy and then insure on lot).

Dealers do not make a lot of money on new car sales, usually a thousand or so dollars (recent gouging notwithstanding) . The money is in used cars, services, and extras extras extras.

Let's also remember plant scheduling is hard when you have order variability. Logistic planners who do that for a living can probably weigh in more here.

I too find that in today's market the local salesman usually is not an added value. However, having local people around that are not employed by the manufacturer does potentially give an arms length to the transaction potential. The local dealer also knows that in most cases the customer can go down the road to another dealer. If it is like Tesla, there is one deal controlled by the one factory. You have to take it or go elsewhere for a different brand.