You’ve misattributed your second quote. I didn’t say that.
But the manufacturer would have no incentive to eliminate any of that overhead. Or if they did, they’d have no incentive to pass that savings onto the customer. Dealers right now compete against each other, which means that if dealer A eliminates pricing obfuscation and their customers like it, dealer B would have to follow suit. Clearly pricing obfuscation isn’t a dealbreaker, which means there’s no incentive for the manufacturers to stop doing it if they were running the show.
I’m going to quote myself from a post I made on another board a few months ago, when Tesla was being fought in Ohio by a trio of dealerships, including Ricart, a massive dealer network.
[QUOTE=me]
For a lot of [the dealership overhead] you’re describing, it doesn’t matter who owns the dealership. If Ford took over Ricart’s new car sales right now, they could keep the entire management chain in place, keep the entire sales staff in place with the exact same employment structure, keep the finance, accessories, undercoating, rust protection, and extended warranty people in place, annoying the piss out of their customers like always. Hell, Ford could just keep all of Ricart’s profits as their own and keep prices exactly where they are, or even raise prices because they’d own all the dealerships. In that regard,you’re exactly right; relaxing franchise laws isn’t some magic panacea that will make the car buying experience a lot better.
It will improve some things, though, like the barrier to entry for niche brands. How did Fiat start selling cars in the US again? They bought Chrysler. Obviously there are other hurdles with federalization of European cars, but if you want to buy a Citroen or a Renault, good luck with that as long as those companies either have to front the cash for a massive franchise network or buy a struggling domestic automaker of their own.
Another area of improvement is controlling inventory. In the run-up to GM’s bankruptcy, one of the things they complained about was their inability to shutter individual dealerships to match their falling market share, especially in urban areas where they often have 2 to 3 times as many dealers as the Japanese brands because those GM dealers were there long before Honda was selling cars here. Long after industry analysts had beat the “GM has too many goddamn brands” horse to death, GM had to keep Oldsmobile and Pontiac going because it took years to negotiate settlements with a dealer network that was unwilling to close down for the good of GM.
There’s a lot of redundancy across dealerships that could be eliminated if Ford consolidated the 10 or so dealerships within an hour of [where I live]. It remains to be seen whether any of those savings would be passed on to the customer, but the current system has got to be woefully inefficient.
[/QUOTE]
I changed it to brickbacon
I have never bought a new car above the dealer’s invoice, and in most cases at least $1,000 below their invoice from the manufacturer.
How? Buying at the end a of a quarter, and understanding that dealers get volume rebates back from the manufacturer that are on a sliding scale. So if they are able to sell enough cars in a given period, the amount of the rebate per car sold will increase. This will vary with the demand for particular makes and models, so YMMV.
I worked for Ford (although this was back in the early 1980s) and you could buy a new car on the A Plan for 2% below dealer invoice. But you had to do the transaction with a dealer. I don’t know what Ford’s arrangement was with the dealers. The other US car makers did the same thing. I do not know what they do today.
You can actually turn this in your favor if you play your cards right. Go into the dealer with with your employee discount in your pocket and don’t tell them about it and then let them know that you are trading in your old car as part of the new car purchase. Usually they will offer you more money for your used car if they think you are going to buy a new one and will try to screw you on the new car price to make up for the good deal on the trade. Then after you have settled on the trade in price show them your employee discount which obligates them to give you the new car at a set price. They will immediately try to back out of the trade in deal. If they do inform them that they are separate deals and that you are willing to just sell them your car at the price they quoted and go to another dealer for a new car. They hate when people do that as they always play the game that the two deals are separate when it plays to their advantage.
Boy, am I a broken record. Every time I see a post like this, my advice is always the same.
Use the Costco Auto Buying service (assuming you are a Costco member). The price I’ve found is always great, it is a fixed price with no haggling, and you don’t have to talk to salesmen. You talk to the leasing agent, typically,
I have used this service for my new cars for the last several decades, and I probably will use them for the rest of my life for new cars. I have nothing but praise for this service.
J.
I don’t doubt that you got some good pricing using CostCo but for the last two cars I bought I did better than the CostCo price. I had to work at it and negotiate past a lot of the dealer tactics, but with research and patience I got a better price.
So while CostCo is a decent no-haggle price, a bit of experienced haggling gets a better price.
What if you don’t want to lease?
There’s no requirement to lease the vehicle. What jharvey963 said is that when you purchase a car through Costco’s car buying service, you work with the dealership’s leasing agent to complete the paperwork, rather than a regular sales person. FYI, a friend who used the Costco service said that he worked with the fleet sales rep at the dealership.
It really depends on the car. The Costco price (and the other similar fixed price services) are generally just a fixed amount or percentage over invoice regardless of what the cars are actually selling for. For cars that are flying off the lot, the dealers generally aren’t going to negotiate too much and so the Costco price can be a really good deal (assuming they’ll sell you one-- they don’t have to and might not if they’re selling at a premium to normal buyers). But if you’re looking at a car where there’s lots of them sitting in dealer inventories, you probably can negotiate a better price on your own. IME, for most normal turnover rate type cars the Costco price is pretty close to what a normal person would get after the customary dickering.
I think what jharvey963 meant was that at that particular dealership the purchase was handled through the lease department instead of the normal sales channels. I’ve used the program too, though, and I just had to go through a normal salesman so that varies from dealer to dealer. There’s also of course still plenty of opportunity for them to confuse you about trade-ins, financing, dealer add-on accessories and such.
The situation on this side of the Atlantic is pretty much the same. There is no law that says a manufacturer cannot sell direct, but none of them do, not even to large fleets. I used to be the fleet manager for a company that was part of a group that ran thousands of Ford cars nationwide. They bought a Ford dealership, to ensure they were getting, not only the best deal on purchase, but all the latest service updates as well.
The dealer has to do a fair amount of work between accepting a car and delivering it. It has to be carefully checked over for minor damage, audio equipment fitted, and registration completed. Then they will often have to show the new driver all the latest gizmos that weren’t on his last car.
We never did trade-ins. All our cars went straight to auction for no hassle and quick return.
This is the fourth or fifth thread on this topic in a month or so, and the composite answer was clear hundreds of posts ago - to me, at least.
[ol]
[li]Cars cannot be sold directly by manufacturers because of laws dating to the 1940s, strenuously supported and enforced by the layer that benefits from the situation: car dealers.[/li][li]The difference between a Ford-run sales outlet and an “independent dealer” would be the same as the difference between a “company” McDonald’s and an independent franchisee’s: next to none except that the company-run store would likely be better-run.[/li][li]There are plenty of national and state laws regarding consumer protection and satisfaction that completely obviate the need for an “independent” layer of sellers, no matter how much that might have been needed in 1952.[/li][/ol]
[Cue a few thousand words about how all of this, and everything else said, is wrong…]
It can all be boiled down to one word: Corruption.
Bolding mine.
How do you figure? Are you claiming that the dealership can somehow be forced to buy your “trade in” without you purchasing a car?
Again, dealers makes a good deal of their profits on things other than the price of the vehicle- namely servicing and financing. Regardless, that overhead would likely be there in part regardless of who sells you a car. And even if there was no overhead, manufacturers would have no reason to pass the savings on to consumers. Why would they given they would essentially have a monopoly on their brand?
This is nonsense. You can go onto any manufacturer’s website to find out the MSRP on almost any car configured in any way. You can also go on to sites like True car to get a nailed down quote on a real vehicle at multiple dealers in your local area. The reason why dealers make far less money on new cars sales these days is because buyers have good pricing info. If a consumer is “confused”, it has nothing to do with what a dealer does. Either way, you are making the classic mistake of thinking that the price paid has to be tied to the cost of the item, or that one could use the cost to leverage a seller with a monopoly and sufficient demand.
It’s amazing, really. You CANNOT post on this topic without arguing all sides of it, even when you contradict yourself in subsequent paragraphs (much less successive posts).
You have yet to make *any *convincing case that there is *any *real-world difference, in 2014, between cars sold by maker-owned “factory outlets” and putatively “independent” dealers (who are so bound by shelf-feet of marketing and sales agreements that “independent” becomes a laughable term).
Quit arguing that the situation back in the 1930s-50s somehow persists today and justifies an additional sales/interface layer between manufacturers and buyers when a hundred other product industries sell directly, with or without additional “independent” retailers, while simultaneously arguing that the car buying process is somehow completely open and transparent because of this middle layer.
… And you’d have to buy a new car every time the battery needed replacing…
I used to buy a new car every time the ashtrays were full, but the car I have now doesn’t have ashtrays and no one I know smokes now.
So I’m forced into waiting for the battery to die. But like Apple’s products, it seems invulnerable.
Please point out any contradiction you see.
I have made the case several times. If you have no understanding of how markets work, or chose to ignore the reality of the situation, that has nothing to do with my explanation.
Once again, please explain how the move will be good for consumers in aggregate? Why do you think prices will go down while maintaining the same level of service and volume of sales?
The two things are not contradictory at all. The reality is there is far more cost and price transparency in the auto industry than there is an almost any other place. Additionally, there are still reasons why a middle layer is good for consumers and governments. This is really not that complicated despite your inability to understand the issue.