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codrus (Forum Supporter)
codrus (Forum Supporter) PowerDork
6/6/22 5:52 p.m.
SV reX said:

In reply to codrus (Forum Supporter) :

I'm pretty involved in branding dealerships. You'd be shocked how much control OEMs have over dealers and the entire sales experience. They defend their brands heavily. 

This is a relatively recent (OK, last few decades) innovation, before that it was pretty open.  It's there now because the manufacturers are tired of the dealers screwing things up for them and are trying to clamp down as much as they can.  Going direct allows them a much greater degree of control over the brand and customer experience.

 

SV reX
SV reX MegaDork
6/6/22 5:54 p.m.

Manufacturer required "preferred vendors" give shockingly poor performance and products at astoundingly horrible prices. 
 

I could cut nearly a HALF A MILLION DOLLARS out of the average new car dealership if OEMs  didn't force a wide variety of things to "protect their brands". I could offer far better product, at a far lower cost using locally available vendors.  Trust me, consumers pay handsomely. 
 

I can't wait to see how much we get reamed when OEMs have full control of the entire chain. 

SV reX
SV reX MegaDork
6/6/22 6:31 p.m.

The dealership group I am currently working for sells 8 different brands. 
 

For the months of July and August, their orders have been confirmed. The manufacturers have confirmed they will only receive 5.7% of their normal order. They will be short-changed by over 2600 cars for those 2 months. 
 

Try running your business on 5.7% of your normal revenue (while spending millions of dollars to "protect" someone else's brand)

Consumers think the dealers are screwing them, but sometimes that's because the dealers are the face of the manufacturers.

To be clear, I'm no fan of dealers. But it's absolutely nuts to think manufacturers are gonna do a better job.  

codrus (Forum Supporter)
codrus (Forum Supporter) PowerDork
6/6/22 6:42 p.m.
SV reX said:

To be clear, I'm no fan of dealers. But it's absolutely nuts to think manufacturers are gonna do a better job.  

 

Steve_Jones
Steve_Jones Dork
6/6/22 9:39 p.m.

In reply to codrus (Forum Supporter) :

Here's the issue, the end consumer is not the manufacturers customer, the dealer is. Before the craziness Honda could sell that dealer 20o cars a month, and if the dealer doesn't sell them, they don't care, they've made their money. In the case above, the dealer owns that car and can ask whatever they want, just like you can ask whatever you want for your stuff, no one is forcing you to buy it. 

SV reX
SV reX MegaDork
6/7/22 7:14 a.m.

In reply to codrus (Forum Supporter) :

One stupid window sticker does not define failure for an entire industry. 

Robbie (Forum Supporter)
Robbie (Forum Supporter) MegaDork
6/7/22 10:13 a.m.
Steve_Jones said:

In reply to codrus (Forum Supporter) :

Here's the issue, the end consumer is not the manufacturers customer, the dealer is. Before the craziness Honda could sell that dealer 20o cars a month, and if the dealer doesn't sell them, they don't care, they've made their money. In the case above, the dealer owns that car and can ask whatever they want, just like you can ask whatever you want for your stuff, no one is forcing you to buy it. 

No problem with that. 

However, it seems that both the manufacturer and the end consumers are pretty fed up with the dealer right now, and neither has the option to go elsewhere.

Keith Tanner
Keith Tanner MegaDork
6/7/22 10:45 a.m.
SV reX said:

In reply to codrus (Forum Supporter) :

One stupid window sticker does not define failure for an entire industry. 

I have the pricing worksheet from the selling dealer for my 1985 CRX Si. $1000 dealer markup on a $9995 car. Not quite as stupid as the example above, but dealers have been charging as much as they can get away with for a long time. The outlier right now is the real scarcity of cars so the dealers are "struggling" after many years of living like kings. They're learning what it's like to be farmers :)

The problem with that window sticker is that the customer has no option but to buy from a dealer. This dealer adds no value, only friction and cost.

GameboyRMH
GameboyRMH MegaDork
6/7/22 12:45 p.m.
SV reX said:

I have absolutely no reason to distrust a corporation, but then ENTRUST a MUCH larger corporation. Sounds like a monopoly on the entire chain.

I don't see any evidence that manufacturers are equipped to handle sales and service well. 

The way I see it it's not an "either/or" issue, it's an "and" issue. You're forced to trust the larger corporation because they're the manufacturer, regardless of how the car gets to you - this is an issue even with used cars bought through private sales to some extent (for example I'm worried what the hell Toyota is doing with parts when I barely got the last 4UGSE/FA20 oil pan in the GTA). The smaller corporation is just a not-strictly-necessary middleman that only exists due to ham-fisted attempts to ensure car owners could get local warranty service on their cars. If manufacturers had the option to send trucks to pick up cars that need service Tesla-style rather than having dealerships, they might not ever have existed, and cars would all sell for MSRP (which would then have room in it for delivery costs as well).

In the pandemic car shortage era (and at any time a highly desirable model is released), dealerships are basically acting as entrenched car scalpers - if they didn't exist, there would be preorders for new cars at best, or the company that actually makes the cars would be making all that extra money at worst.

Adrian_Thompson (Forum Supporter)
Adrian_Thompson (Forum Supporter) MegaDork
6/7/22 1:03 p.m.

I think the number of people who feel they need the dealership experience is shrinking as the majority of the buying population have now grown up with the internet.  Heck, if my 82 year old mother can shop, book international travel to come here etc. all online, then there's not much excuse for Mr. and Mrs just retired Boomer to be intimidated by the experience.  That's not to say dealers shouldn't or wont exist, it's just I think the need for them is decreasing.  Also there are many, and I think the number is increasing, people who would go to great lengths to avoid any in person retail experience.  The world is full of introverts who would much rather do everything on line.

As long as there are agreed minimum sales price, then dealers can compete head to head with OEM's.

SV reX
SV reX MegaDork
6/7/22 7:22 p.m.
Keith Tanner said:

I have the pricing worksheet from the selling dealer for my 1985 CRX Si. $1000 dealer markup on a $9995 car. Not quite as stupid as the example above, but SOME dealers have been charging as much as they can get away with for a long time. 

 

Fixed it for you.

Keith Tanner
Keith Tanner MegaDork
6/7/22 8:46 p.m.

No, I think pretty much all. 

I noticed this on a Fomoco official Ford Lightning window sticker today. Nice wiggly verbiage, they could have just as easily said "DEALERS MAY SELL FOR MORE" and it would be just as accurate. But it would be a little too stark.

"NOTE: THIS PRICE HAS BEEN DEVELOPED AS A GUIDE. DEALERS MAY SELL FOR LESS AND ARE NOT UNDER ANY OBLIGATION TO ACCEPT THIS SUGGESTED RETAIL PRICE"

codrus (Forum Supporter)
codrus (Forum Supporter) PowerDork
6/8/22 12:10 a.m.
Keith Tanner said:

No, I think pretty much all. 

As much as the market will bear is how business works, and is certainly within their rights given the current manufacturer/dealer/customer setup.  It's just that it leaves a bad taste in peoples' mouths and that reflects badly on the brand, so the manufacturers have an interest in trying to reduce it.

 

Adrian_Thompson (Forum Supporter)
Adrian_Thompson (Forum Supporter) MegaDork
6/8/22 8:42 a.m.
Keith Tanner said:

No, I think pretty much all. 

I noticed this on a Fomoco official Ford Lightning window sticker today. Nice wiggly verbiage, they could have just as easily said "DEALERS MAY SELL FOR MORE" and it would be just as accurate. But it would be a little too stark.

"NOTE: THIS PRICE HAS BEEN DEVELOPED AS A GUIDE. DEALERS MAY SELL FOR LESS AND ARE NOT UNDER ANY OBLIGATION TO ACCEPT THIS SUGGESTED RETAIL PRICE"

And that should be exhibit A in the anti trust lawsuit to break up the power of the mafia, err I mean dealer association.  

SPG123
SPG123 HalfDork
6/9/22 10:08 a.m.

There is an impressive amount of disinformation and opinion based fact free thinking on this topic here. Yikes.    Much like the current political/culture clash. "All people that look like that are XYZ"  or "All people that are on this political team are XYZ"        May I very humbly offer the following: The idea of ordering a car now from anyone and having it delivered to your couch in 6 to 8 weeks is completely totally wildly improbable. Manufacturers are not able to deliver even a single part in that time frame. We just got in a sold unit that was to be delivered to the store on 12/14. And promised to the customer at that time. That is 6 months ago. It came in with transportation damage as did 5 vehicles last week. Yes, we have to fix that because you know the mfr does not have the ability to do so.         One price fits all? Sure, as long you want to pay the most. Carmax as an example disrupted the business model in order to obtain the MOST profit of any dealer group. Ever. But hey they have cute shirts right.      Dealers do ALL service on vehicles. Manufacturers do NO service. New car breaks and you are looking for some help?  Yes hello mary barra? Can you help make right this problem, get me a loaner? Ringtone?       One poster mentioned that he was not able to obtain fleet vehicles from dealers. In model years 21 and 22, we have received in the order of 5% of the fleet vehicles that we "ordered" through channels current at that time. That would be one in twenty eh?     So we WILL absolutely prioritize our local and frequent customers. Cold call on a van that I have gotten one of in 18 months and that local business owners need to stay in business? Um no. We used to get at least five calls A DAY on vans that no one could get.       One poster correctly noted that dealers are the buffer. This is absolutely correct.     No one cares less about you than a manufacturer. Except the government possibly. There is zero no none accountability. They say and do whatever they feel at the moment which contradicts the mandatory rule they made yesterday regardless of the impact on you. Or me.    More on fixed pricing. We were recently blessed with two vehicles ordered the same day, same way. invoice difference, $1000. And the next one will be more. That is not dealer profit. That is dealer cost.      In short (er) Dealers are completely bound to the standards and vagaries of the mfr. Which currently is so much goofier that you can ever imagine. Most and particularly family owned stores are owned/manged by good people that are very solid members of their communities. Go to any little league park or any community event anywhere and see who is really giving back. We see charitable requests every day. Is a dealer a for profit business? Yes. Is a bank a for profit business? Yes. Is the business that YOU are involved in for profit?  Should they advantage of people? No. What happens in a community when any business gets a reputation for doing that?      Oh and all of us have seen/ heard the numerous ads and noise about the electrics. There is a place for them along with ICE and whatever else is coming. But the cake is not fully cooked. Or even remotely close for them to be 100% of vehicles.  As an example, gm delivered maybe 30 electric vehicles in the first three months of this year worldwide. A dealer would lose his franchise license if he delivered a recalled Bolt (almost all were). for like two years. And if you did have a Bolt, you got a letter telling you to park at least 50 feet away from your home. Just saw a new hummer. It weighs more than a Silverado 6500. Over 9,000lbs empty. Has the cargo capacity of one hermes man purse. And will very likely not physically fit in any garage owned by anyone who would carry a man purse. Which is good I suppose. You know in case they get a letter telling them to park at least 50 feet outside the house...                                              

TheTallOne17
TheTallOne17 Reader
6/9/22 10:32 a.m.

In reply to SPG123 :

I think your enter key broke cheeky

jwagner (Forum Supporter)
jwagner (Forum Supporter) Reader
6/9/22 10:41 a.m.

In reply to SPG123 :

You provide a pretty fierce defense of the value that dealers provide.  No doubt the dealers provide some value.  Still, I want the manufacturers to have the option of making the choice of selling direct, and I want the choice of whether to buy from them.  Let the market decide.

Tesla cannot sell in Wisconsin because the dealer lobby owns the politicians and deep sixed a change in the 100 year old law.  They tried.  They have a showroom, but can't sell a car here.  It's stupid and corrupt.  https://en.wikipedia.org/wiki/Regulatory_capture

 

 

Keith Tanner
Keith Tanner MegaDork
6/9/22 10:42 a.m.

Can you order a car and get it delivered within 6-8 weeks? Yes. Of course, RIGHT NOW there are disruptions all over the place. But we're interested in moving forward, and it's been proven by manufacturers that it's possible.

Dealers as a buffer? Not really. They pre-select what they think will sell, so you actually are limited to what the sales manager has put on the lot. If you order from the manufacturer, you can get exactly what you wait straight from the warehouse so to speak. This also allows the manufacturer to keep smaller inventories. They know how to do it with the parts coming in to the factory, so they just do it with the cars coming out. It's scary compared to Honest Jims Discount Chevy Sales, but it gets rid of a lot of extra inventory sitting around.

One price fits all? Sure, if you want to pay a fair price and not whatever magic numbers the dealer is able to sneak past you. I've worked in a dealership, don't try to pretend they're trying to get the best deal for their customers. A dealer will never sell for less than a certain amount, but they'll sure as hell charge more if they can get away with it. THAT'S what pisses people off, the fact that it's a negotiated price where all the customer can do is not lose too badly. You said yourself you prioritize your favorite customers. How is that fair to a first-time buyer? It's not, they're second class in your dealership.

Service? There are hundreds of thousands of shops that can service cars that are not dealers. And there's at least one manufacturer doing it.

No one cares less than a manufacturer? The reason you think the manufacturer doesn't care is exactly because they don't have accountability, and the reason the dealer doesn't care is because they can blame everything on the manufacturer, they're just an intermediary and thus they have no accountability. Make them the same unit and all of a sudden there's your accountability and your direct contact.

Little league? Sure, whatever. That's advertising for your "home town dealer" that's more likely than not owned by a megacorp behind the scenes.

We all know why GM could only deliver a handful of EVs over the past three months. They've managed to deliver a whole lot more than that overall.

Those transport damaged cars are being sold with full disclosure of the repair, right? I know that they can't be sold if they're damaged beyond a certain amount (we got one of those from Mazda as a race car once), but I don't know if that's after they belong to the dealer or not.

iansane
iansane Dork
6/9/22 11:06 a.m.

I actually think this thread has changed my perception/opinion of Mfg vs dealer. Dealer may be the lesser of two evils. 

SPG123 said:

One poster mentioned that he was not able to obtain fleet vehicles from dealers. In model years 21 and 22, we have received in the order of 5% of the fleet vehicles that we "ordered" through channels current at that time. That would be one in twenty eh?     So we WILL absolutely prioritize our local and frequent customers. Cold call on a van that I have gotten one of in 18 months and that local business owners need to stay in business? Um no. We used to get at least five calls A DAY on vans that no one could get.

I think you might be referring to me here. I'm not asking for the dealers I called on to deliver a fleet of vehicles to me in a few weeks. I was just asking them to call me back and open a dialogue. I know pricing is a rollercoaster right now but at the very least be open with communication. This isn't trying to be a blanket statement but I've met far more unscrupulous dealer salesmen than admirably honest ones.

SV reX
SV reX MegaDork
6/9/22 11:33 a.m.
Keith Tanner said:

Can you order a car and get it delivered within 6-8 weeks? Yes. Of course, RIGHT NOW there are disruptions all over the place. But we're interested in moving forward, and it's been proven by manufacturers that it's possible.

Dealers as a buffer? Not really. They pre-select what they think will sell, so you actually are limited to what the sales manager has put on the lot. If you order from the manufacturer, you can get exactly what you wait straight from the warehouse so to speak. This also allows the manufacturer to keep smaller inventories. They know how to do it with the parts coming in to the factory, so they just do it with the cars coming out. It's scary compared to Honest Jims Discount Chevy Sales, but it gets rid of a lot of extra inventory sitting around.

One price fits all? Sure, if you want to pay a fair price and not whatever magic numbers the dealer is able to sneak past you. I've worked in a dealership, don't try to pretend they're trying to get the best deal for their customers. A dealer will never sell for less than a certain amount, but they'll sure as hell charge more if they can get away with it. THAT'S what pisses people off, the fact that it's a negotiated price where all the customer can do is not lose too badly. You said yourself you prioritize your favorite customers. How is that fair to a first-time buyer? It's not, they're second class in your dealership.

Service? There are hundreds of thousands of shops that can service cars that are not dealers. And there's at least one manufacturer doing it.

No one cares less than a manufacturer? The reason you think the manufacturer doesn't care is exactly because they don't have accountability, and the reason the dealer doesn't care is because they can blame everything on the manufacturer, they're just an intermediary and thus they have no accountability. Make them the same unit and all of a sudden there's your accountability and your direct contact.

Little league? Sure, whatever. That's advertising for your "home town dealer" that's more likely than not owned by a megacorp behind the scenes.

We all know why GM could only deliver a handful of EVs over the past three months. They've managed to deliver a whole lot more than that overall.

Those transport damaged cars are being sold with full disclosure of the repair, right? I know that they can't be sold if they're damaged beyond a certain amount (we got one of those from Mazda as a race car once), but I don't know if that's after they belong to the dealer or not.

Keith, you are one of the people I trust more than anyone on this site. But your bias is strong on this, and you are incorrect on many points. 

SV reX
SV reX MegaDork
6/9/22 11:39 a.m.
Keith Tanner said:

No, I think pretty much all. 

This is one of the most biased statements you have ever made. 
 

I know how fiercely you would defend against the exact same statement if it was made about after market parts suppliers. And I would be 100% in agreement with you. 
 

I count on you to offer balanced and well-informed perspectives on most topics. This one might need a break. 
 

I'm gonna step away for a while. 

wae
wae PowerDork
6/9/22 11:46 a.m.
Keith Tanner said:

You said yourself you prioritize your favorite customers. How is that fair to a first-time buyer? It's not, they're second class in your dealership.

I hate to be in a position to appear to be sticking up for car dealers here, but....  What business doesn't - or shouldn't, I guess - prioritize good repeat customers?  Maybe your industry is vastly different from mine, but it is very expensive to get a new prospect to walk through the door.  Upselling an existing customer or getting them to come back for their next purchase is far less expensive, typically.  Every business that I've ever experienced has heavy incentives to retain existing customers.  The dealership doesn't need to market as heavily to me if I know that when I need a new vehicle, I can call "my guy" over at the dealer and know that he can get me what I want.  Is it similarly un-fair that someone who flies all the time can use their points to upgrade to business class for free while the first-time flyer has to sit in coach? 

Adrian_Thompson (Forum Supporter)
Adrian_Thompson (Forum Supporter) MegaDork
6/9/22 11:46 a.m.

In reply to SPG123 :

Holy guacamole Batman, and I thought I was bad with run on sentences and paragraphs!!

First, can you explain what you are talking about with Carmax?  I don't think I follow. 

Next, while most manufacturers don't offer, or do service, that's because they've been trapped by the mafia, err sorry dealers.  But it's not a hard and fast rule.  First of Tesla does vehicle service.  Even though this and many others States pander to the dealers, so wont let Tesla sell direct, you know to protect the free market and prevent the price fixing the dealers do every day.  Despite that the Tesla service center is less than 20 mins away from here, owned and run by Tesla.  I also know that in the past at least, people like Mercedes had service only centers in some places as dealers in some city centers don't want to worry about service centers.  And if companies are gearing up to sell DTC, then I'm sure they're smart enough to figure the vehicles will need servicing and account for that.

As for the impossibility of building cars to order, it's a short term issue due to a series of global events badly effecting the whole manufacturing and supply chain across almost all industries.  When things return to normal, and they always do, then you'll see it work again.  Again, I think this is a largely American issue.  The rest of the world, OK, let's say Europe at least as that's what I know and have experience with, tend to walk in and spec and order a car, expecting to receive it in 6-12 weeks.  For some reason Americans don't like that.  They want to wake up on a Saturday morning and say 'It's time to buy a new car' and expect to roll home 6-8 hours later with a new whizz bang 10,000 in the color and monthly payment to suit.  This has been exacerbated by the increasing popularity of leasing (it's all about the monthly payments yo!) as I think people are less invested in a lease car than something they own so even more expect instant gratification.  As such, the US dealers are built round that model where they have potentially hundreds of cars in stock at one time.  Land values alone make that impractical in Europe, no dealer could afford a few acres just for parking millions of dollars in inventory.  

Adrian_Thompson (Forum Supporter)
Adrian_Thompson (Forum Supporter) MegaDork
6/9/22 12:07 p.m.
wae said:
Keith Tanner said:

You said yourself you prioritize your favorite customers. How is that fair to a first-time buyer? It's not, they're second class in your dealership.

I hate to be in a position to appear to be sticking up for car dealers here, but....  What business doesn't - or shouldn't, I guess - prioritize good repeat customers?  Maybe your industry is vastly different from mine, but it is very expensive to get a new prospect to walk through the door.  Upselling an existing customer or getting them to come back for their next purchase is far less expensive, typically.  Every business that I've ever experienced has heavy incentives to retain existing customers.  The dealership doesn't need to market as heavily to me if I know that when I need a new vehicle, I can call "my guy" over at the dealer and know that he can get me what I want.  Is it similarly un-fair that someone who flies all the time can use their points to upgrade to business class for free while the first-time flyer has to sit in coach? 

You're both right.  People should prioritize good customers and existing relationships, but that by definition does discriminate against the new guy.

I'm not arguing against dealers, I'm arguing that dealers are abusing their position.  They claim they are needed to protect the consumer, but as an industry they have a horrible, well earned, reputation for doing the opposite in many cases.  Price gouging because you don't have the option to go else where.  Playing favorites.  Hell, up thread we've got examples of dealers saying 'Nah, we aren't interested in half you product line, we're not going to get involved with that'.  Eff them.  Agree to play by truly fair rules, or sod off and let the manufacturers sell DTC.  The DTC is one of the very very few things I agree and side with every ones favorite Bond villain Musk on.

As an aside to how E36 M3ty dealers are, and this is as much about the brand as the actual dealers.  Ferrari.  The horror stories about Ferrari dealers are legendary. 

  • You want to order a new Ferrari from us sir?  Certainly, come back in a few years after you've bought two or three used ones off us.  
  • You want to replace your existing Ferrari with a new one from us?  OK, we'll give you 80% of market value as trade in.  What's that? you want to sell it else where?  No problem, but where are you going to order your new car from as if you don't sell the old one to us you're not ordering a new one from us.
  • Oh, you want to order the new fancy model from us?  Sure.  Oh, hang on, you've only bought a couple of regular models from us in the last five years, sorry, you might want to be ordering at least one regular car a year from us if you want the new million dollar car.
  • Massive pressure to add options to over 25% of base price, and that's pressure coming from Ferrari to dealers.

I've read all of those scenarios on line, FChat, Lambo chat, McLAren Chat etc. met people who tell the same stories (multiple new Ferrari owner, although I haven't seen that person for years).  It's one of the reasons I think Ferrari is in danger of becoming the next Harley Davidson.  They are becoming so obnoxious that if you aren't already part of the in crowed (I'm talking new cars here), then you are treated so badly that you look else where.  The majority of new owners coming from the same aging group.  For cars in the same price range, I almost never see younger (under 50ish) driving new Ferraris these days.  Those younger people with similar spending power are driving McLArens and Lambo's instead, where you are welcome to spec and order what you want.

 

Steve_Jones
Steve_Jones Dork
6/9/22 12:27 p.m.

In reply to Adrian_Thompson (Forum Supporter) :

All of that Ferrari stuff comes from the manufacturer, not the dealer.  Ferrari decides if the dealer is allowed to sell you the car as crazy as it sounds.

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