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Is It Time To Change Car Dealership Model?  
User currently offlineNorthstarBoy From United States of America, joined Jun 2005, 1825 posts, RR: 0
Posted (5 years 5 months 1 week 5 days 23 hours ago) and read 3357 times:
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With all the news about the automobile industry floundering, with Ford, GM and Chrysler on life support, I can't help but wonder if it's time to change the entire car sales model?

It seems to me that car sales are done in a speculative fashion, the manufacturer builds hundreds of cars with no pre-set buyers, ships them to dealerships, where they sit on the lot for days/weeks/months, all in the name of offering consumers a choice. How about instead they adopt the furniture store model.

The manufacturer sends out representative cars for each model that sit in a showroom and are available for test drives, but when it's time to buy the car, the buyer looks through some kind of catalog, selects the trim and color of the model he wants, the dealership then orders it online and the car is shipped direct to the buyer. As for financing, the financing process is done when the car is ordered. When the buyer leaves the dealership he has financing in place and an order slip letting him know when his new car will arrive. This would actually save some people the embarrassment of driving a car off the lot then getting a call from the dealership a week later telling him he needs to bring in more money or bring the car back.

As already happens with most other disposable goods, trade ins would be a thing of the past. if the potential car buyer wants to get rid of his old car, he can sell it to a car recycler, he can sell it to a private party, or to a used car dealership, he then gets an upfront payment based on the blue book value that he can do whatever he likes with, apply it to a new car, go to the bahamas, whatever.

I know it seems like a crazy idea, but i think it could help the auto industry by reducing the number of unwanted cars sent out just to stock dealer lots. there would be no lot, just a showroom with a few individual cars and knowledgeable sales people. As with the current car industry, car sales would be final, once it's delivered it's yours whether you want it or not, you pay for it regardless.

what does anyone else think?


Why are people so against low yields?! If lower yields means more people can travel abroad, i'm all for it
48 replies: All unread, showing first 25:
 
User currently offlineCairo From , joined Dec 1969, posts, RR:
Reply 1, posted (5 years 5 months 1 week 5 days 23 hours ago) and read 3344 times:

New cars - just pick your car on the internet with all the colors and options you want; modern software and supply chain controls should be able to build and deliver this car within a week.

...OR go to maybe one regional showroom where you can buy a car immediately, kept on stock in large numbers, outfitted in perhaps half a dozen standard options packages.

End the literally 100s of new car dealerships in major cities - they are a wasteful group of middlemen. End the financing nonsense - dealers never want you to bring your own financing, will always try to run your credit, and have different prices for the car based on your credit, among other variables.

Pricing - this is ridiculous. No other popular manufactured product purchased one-at-a-time in large numbers could have dozens of different prices depending on the salesman and negotiating tactics of the buyer. What is the point of the salesman anyway?

One price for everyone - and eliminate all the middlemen (dealers). They are all cheeseballs and trying to rip you off!

Cairo


User currently offlinePROSA From United States of America, joined Oct 2001, 5632 posts, RR: 5
Reply 2, posted (5 years 5 months 1 week 5 days 23 hours ago) and read 3340 times:

Car dealers have enormous lobbying power, especially at the state level. Any sort of structural change that would render them obsolete just isn't going to happen in this universe.


"Let me think about it" = the coward's way of saying "no"
User currently offlineWildcatYXU From Canada, joined May 2006, 2598 posts, RR: 5
Reply 3, posted (5 years 5 months 1 week 5 days 23 hours ago) and read 3330 times:

Building every single car to a personal order would be way too expensive. Moreover, what would you do with people who have money and would need the car immediately?

User currently offlineCairo From , joined Dec 1969, posts, RR:
Reply 4, posted (5 years 5 months 1 week 5 days 22 hours ago) and read 3317 times:



Quoting PROSA (Reply 2):
Any sort of structural change that would render them obsolete just isn't going to happen in this universe

Yeah, well, the "structural change" is happening right now, like it or not - Saturn, Hummer and Pontiac dealers are now disappearing, following their Oldsmobile brothers.

If it weren't for the last auto bailout, lots of GM & Chrysler dealers would be no more right now and many will have to close anyway.

The writing is on the wall and dealer numbers have been in steep decline for a whilte - their time as a required player in the car buying process should end -the fact that the manufacturers aren't selling direct to the consumer like every other producer just shows their continued state out of 1950s mindset.

Quoting WildcatYXU (Reply 3):

Building every single car to a personal order would be way too expensive.

Yeah, the way they operate now, but with less idiocy and tangled processes, and with good software and automated production, made-to-order wouldn't be hard on a large scale. In any event, I think the best proposal is just to make some large portion of car buying direct from the factory and made-to-order, but not necessarily ALL of it.

Quoting WildcatYXU (Reply 3):
Moreover, what would you do with people who have money and would need the car immediately?

One GM lot in Chicago that serves all of Chicago and end all the dealers, selling cars available now for prices noticeably higher than what you would pay if you ordered online direct from the factory. Repeat scenario in the top 50 cities in the country. END the dealer/middlemen - where is their value-add to the transaction except being annoying?

Cairo


User currently offlineBok269 From United States of America, joined May 2007, 2105 posts, RR: 0
Reply 5, posted (5 years 5 months 1 week 5 days 22 hours ago) and read 3295 times:



Quoting Cairo (Reply 4):
Yeah, well, the "structural change" is happening right now, like it or not - Saturn, Hummer and Pontiac dealers are now disappearing, following their Oldsmobile brothers.

A few brands disappearing is hardly a structural change in the way dealerships operate.

Quoting NorthstarBoy (Thread starter):
The manufacturer sends out representative cars for each model that sit in a showroom and are available for test drives, but when it's time to buy the car, the buyer looks through some kind of catalog, selects the trim and color of the model he wants, the dealership then orders it online and the car is shipped direct to the buyer.

Thing is a vast majority of buyers don't care that much to spend that much time ordering and waiting for their car to be delivered. Most people just want to go in and walk out with keys in hand. Not to mention most people don't care about how their car is configured. Sure, they may want a couple of options or a certain color, but many wouldn't wait to have a car configured especially for them.

Also, I'd imagine its much easier to sell a buyer a car that they can see, touch, and drive than one that is ordered out of a catalogue after driving a demo. Being able to see the car in person helps get people excited.

Finally the supply chain would be woefully inefficient. Delivering a single car straight from the factory to the consumer would cost a lot more than delivering cars in bulk to the dealer lot.

Quoting NorthstarBoy (Thread starter):
As already happens with most other disposable goods, trade ins would be a thing of the past

A used car is hardly a disposable good. Unlike a TV or a computer, a car can last 15+ years (far beyond where most people trade cars in) without becoming obsolete. Used cars are also a major source of profit for dealers and are a great way to get new buyers in the door with the hopes of eventually moving them up to newer and more expensive vehicles.

Quoting Cairo (Reply 4):
One GM lot in Chicago that serves all of Chicago and end all the dealers

While I agree that dealers add a needless cost to the equation, having one lot for an entire city or region would be inconvenient and a detriment to not only sales but also service, which is a dealer's biggest money maker in many cases. I've toyed with the idea that dealers should be corporate owned, standardizing the buying process and lowering prices while hopefully raising customer service. You'd also eliminate the competing for sales between dealers.

On the other hand, doing so would require the manufacturers adding additional infrastructure (which could in the end be more efficient than having individual dealers do the same tasks such as HR, etc.).



"Reality is wrong, dreams are for real." -Tupac
User currently offlineACDC8 From Canada, joined Mar 2005, 7642 posts, RR: 36
Reply 6, posted (5 years 5 months 1 week 5 days 21 hours ago) and read 3286 times:



Quoting WildcatYXU (Reply 3):
Building every single car to a personal order would be way too expensive. Moreover, what would you do with people who have money and would need the car immediately?

Its very common in Europe to buy a car and wait a couple to a few months while they build it. If I'm not mistaken, VW's Autostadt in Wolfsburg is one of the worlds largest car delivery facilites. Pretty neat concept, you order your car and when the delivery date comes along, you take a couple of days off, go up to Wolfsburg, take a tour of the facotries, museum, stay in their on site hotel and take delivery of your new car.

The City Golf I have currently had a 6 month delivery time when I ordered it. The dealership did have some Golfs on the lot, but not with the options I wanted.

It could work, its just something we'd have to get used to. I don't know how much money it would save the manufacturer/dealerships.

As far as needing a car right away, I'm sure the dealerships would always carry some inventory on the lot, but again, its just one of those things we have to adjust to.



A Grumpy German Is A Sauerkraut
User currently offlineN174UA From United States of America, joined Jun 2006, 994 posts, RR: 0
Reply 7, posted (5 years 5 months 1 week 5 days 21 hours ago) and read 3269 times:



Quoting ACDC8 (Reply 6):
Pretty neat concept, you order your car and when the delivery date comes along, you take a couple of days off, go up to Wolfsburg, take a tour of the facotries, museum, stay in their on site hotel and take delivery of your new car.

I would love to drive from Seattle to Detroit, and tour the Detroit area while I wait for my car...  Wink Actually, I'd rather fly to Stuttgart or Munich...

I'm all for ending the dealership model, though I don't see it going away in entirety. I think we'll see a lot less, and less models to choose from, but that is a good thing - market forces are at work. I do believe we'll see more of this internet shopping and financing in the coming years.


User currently offlineACDC8 From Canada, joined Mar 2005, 7642 posts, RR: 36
Reply 8, posted (5 years 5 months 1 week 5 days 21 hours ago) and read 3267 times:



Quoting N174UA (Reply 7):
Actually, I'd rather fly to Stuttgart or Munich...

Thats actually not that uncommon either ...

http://www.mercedes-benz.ca/index.cfm?id=3278



A Grumpy German Is A Sauerkraut
User currently offlineBok269 From United States of America, joined May 2007, 2105 posts, RR: 0
Reply 9, posted (5 years 5 months 1 week 5 days 20 hours ago) and read 3263 times:



Quoting ACDC8 (Reply 8):

Thats actually not that uncommon either ...

http://www.mercedes-benz.ca/index.cfm?id=3278

The European Delivery program isn't designed to eliminate dealership delivery (since after an owner drives their car around Europe their vehicle is shipped to the dealer), but to decrease the duties paid since it allows the manufacturer to import the car as a used vehicle versus a new one. IIRC very few customers actually opt for this option.



"Reality is wrong, dreams are for real." -Tupac
User currently offlineACDC8 From Canada, joined Mar 2005, 7642 posts, RR: 36
Reply 10, posted (5 years 5 months 1 week 5 days 20 hours ago) and read 3259 times:



Quoting Bok269 (Reply 9):
The European Delivery program isn't designed to eliminate dealership delivery (since after an owner drives their car around Europe their vehicle is shipped to the dealer), but to decrease the duties paid since it allows the manufacturer to import the car as a used vehicle versus a new one.

I wasn't suggesting thtat it was. I would think that flying to Europe and bringing your car back would never generate enough interest to actually make it a viable program to reduce inventory on the lots. Still, a damn nice option though Big grin

Quoting Bok269 (Reply 9):
IIRC very few customers actually opt for this option.

That doesn't surprise me. I know a few people who own MBs, and they've never even heard of the program.



A Grumpy German Is A Sauerkraut
User currently offlineLTBEWR From United States of America, joined Jan 2004, 13040 posts, RR: 12
Reply 11, posted (5 years 5 months 1 week 5 days 20 hours ago) and read 3248 times:

The concept like that of Dell Computers of sell a majority of the product customer ordered rather than pre-packaged stock has several problems some have already noted. Let me add my 2 cents. Many cars and their parts come from all around the world so it might take months to get it into your dealership. Even final assembly may have to come from Japan or elsewhere meaning months on a boat. Most people want a car they can get in a day or two. Even Dell has to sell preassembled computers in stores like Wal*Mart, Staples, and so on as many customers can't or won't wait.

User currently offlineRevelation From United States of America, joined Feb 2005, 12350 posts, RR: 25
Reply 12, posted (5 years 5 months 1 week 5 days 20 hours ago) and read 3241 times:



Quoting WildcatYXU (Reply 3):
Building every single car to a personal order would be way too expensive.

And take too much time.

The dealer system plays an important role. They provide enough orders to allow the manufacturers to build in bulk and ship as they build.

Imagine if one orders factory direct. How much raw material should the manufacturer order in advance in anticipation of orders? How many parts should they stamp out ahead of time versus waiting for an order?

The dealer network provides the up-front orders needed to justify the large production runs, and they also absorb the cost of the cars sitting on the lot waiting to be sold.

In computer networking there's a saying you can always buy more bandwidth (capacity), but you can never buy less latency (time). Car dealers act as a buffer that eliminates latency.

Quoting WildcatYXU (Reply 3):
Moreover, what would you do with people who have money and would need the car immediately?

Or for those who can get the loan.

For some people I know, buying a car is in essence an impulse buy.

Easy credit made that possible.

Sure, it was financially irresponsible to flip cars every year or so but having a new car every year or so is what turns on some people, just like some people like having a new relationship every year or so or even more often.

We can debate on which lifestyle is costlier!  Smile

Quoting ACDC8 (Reply 6):
Its very common in Europe to buy a car and wait a couple to a few months while they build it.

In addition to the impulse buy crowd, there is also the people who can't plan things out a few months ahead of time.

Quoting ACDC8 (Reply 6):
As far as needing a car right away, I'm sure the dealerships would always carry some inventory on the lot, but again, its just one of those things we have to adjust to.



 checkmark 

But some will never adjust.

And face it, some people get turned on by seeing row after row of gleaming new cars.

The key rule of marketing: give the customer what they want.

Even if it isn't the best thing for them.



Inspiration, move me brightly!
User currently offlineFLY2HMO From , joined Dec 1969, posts, RR:
Reply 13, posted (5 years 5 months 1 week 5 days 19 hours ago) and read 3225 times:



Quoting Cairo (Reply 4):
Yeah, the way they operate now, but with less idiocy and tangled processes, and with good software and automated production, made-to-order wouldn't be hard on a large scale.

That is a valid point, but then again its very different to custom build a PC like Dell does, to build a car.

Quoting Revelation (Reply 12):
In addition to the impulse buy crowd, there is also the people who can't plan things out a few months ahead of time.

Which seems to be 90% of the country nowadays.  Yeah sure


How about this: let all the American auto manufacturers die and disappear from the face of the earth, and let proper automakers take over. Yes some may be more expensive but it won't feel like you're buying a steaming turd. I'm sorry but sometimes "Made/Designed in the USA" isn't a always a good thing, and certainly not when it comes to cars.


User currently offlineTheredbaron From Mexico, joined Mar 2005, 2192 posts, RR: 8
Reply 14, posted (5 years 5 months 1 week 5 days 19 hours ago) and read 3220 times:

VW dealers ask for cars and have a 4 to 8 weeks delivery.

They have limited choices. but for example you could order like 500 different Jetta Versions just for the USA.



The best seat in a Plane is the Jumpseat.
User currently offlineAsuflyer05 From United States of America, joined Feb 2004, 2371 posts, RR: 3
Reply 15, posted (5 years 5 months 1 week 5 days 19 hours ago) and read 3215 times:



Quoting NorthstarBoy (Thread starter):
How about instead they adopt the furniture store model.

Like IKEA?

Quoting NorthstarBoy (Thread starter):
As already happens with most other disposable goods, trade ins would be a thing of the past.

Trade ins will never be a thing of the past. Here's why. The majority of people trading in cars have payoffs. And nowadays, those cars are worth less than their payoff. So without the dealer selling the new car being able to purchase the trade in and roll the trade inequity in the new loan, there would be a lot less sales. Plus, manufacturers have used car requirements from their francisees. CPO programs are big money makers for manufacturers so the idea that a brand would stop selling pre-owned vehicles of their brand is crazy. Especially considering used car profits are generally higher than new cars.

Quoting Cairo (Reply 1):
Pricing - this is ridiculous. No other popular manufactured product purchased one-at-a-time in large numbers could have dozens of different prices depending on the salesman and negotiating tactics of the buyer. What is the point of the salesman anyway?



Quoting Cairo (Reply 4):
One GM lot in Chicago that serves all of Chicago and end all the dealers, selling cars available now for prices noticeably higher than what you would pay if you ordered online direct from the factory.

If you think by eliminating dealerships pricing will go down, guess again. Manufacturer's will just sell cars at their suggested retail price. And from my experience, customer's love to negotiate for a car. That's why the fixed price dealership model has failed miserably in the states. Some guys have pulled it off, like CarMax. But they are few and far between.


User currently offlinePNQIAD From India, joined May 2006, 586 posts, RR: 0
Reply 16, posted (5 years 5 months 1 week 5 days 12 hours ago) and read 3178 times:

It sure would be nice to change the car dealer model in the US. However, there was a story on NPR a few months ago and it said that in most states it was illegal to buy a car directly from the manufacturer. Such non-sense laws were result of the fierce lobbying by the car industry and dealers. So even if all auto manufacturers found religion and wanted to adopt a Dell/HP model of sell to consumers - they can't.

Sadly - Saturn - which I hear was the only car brand with no-haggle pricing will now be ditched by GM.


User currently offlineCairo From , joined Dec 1969, posts, RR:
Reply 17, posted (5 years 5 months 1 week 5 days 11 hours ago) and read 3168 times:



Quoting Bok269 (Reply 5):
Most people just want to go in and walk out with keys in hand.

Yes, and most people would rather shop at the corner store BUT INSTEAD they drive further away to get a lower price at the big box store. You don't have to eliminate ALL the local facilities with cars on hand, eliminate the facilities that add no value to the transaction, but do add cost = the dealers.

The dealers are like a tax on cars and have the same depressing effect on demand.

Quoting Bok269 (Reply 5):
Delivering a single car straight from the factory to the consumer would cost a lot more than delivering cars in bulk to the dealer lot.

No, it wouldn't. They can produce exactly the same cars they would produce for dealer orders and offer them for sale direct, with no custom options - just the same options the dealer would order "in bulk."

Quoting Bok269 (Reply 5):
Used cars are also a major source of profit for dealers

Who cares. Dealers add no value to the process and purely middlemen.

Quoting Bok269 (Reply 5):
detriment to not only sales but also service,

Separate service from sales like every other manufacturer does.

Quoting N174UA (Reply 7):
though I don't see it going away in entirety.

I'm not suggesting elminating a way for people to go somewhere in town and drive away with a new car within an hour - they should just have to pay more for GM to transport it to the dealer, pay the dealer's employees/salesmen, and store it at the dealer until a buyer shows up. Buying direct will save money, a lot of it (all the dealer's sales profits), which will be more than adequate for most people to buy direct, even if it means a slight wait.

Quoting LTBEWR (Reply 11):
Even Dell has to sell preassembled computers in stores like Wal*Mart, Staples, and so on as many customers can't or won't wait.

Very true - and the same thing should happen with cars. But, pricing should be uniform as at Wal Mart and the price should be more when buying through a middleman vendor, as at Wal Mart.

Quoting Revelation (Reply 12):
The dealer system plays an important role. They provide enough orders to allow the manufacturers to build in bulk and ship as they build.

No, the manufactuerers continue to build "in bulk" and offer what has just been built or is about to be built online.

Quoting Revelation (Reply 12):
How much raw material should the manufacturer order in advance in anticipation of orders?

The same they order now - this isn't some mystery.

Quoting Revelation (Reply 12):
The dealer network provides the up-front orders

As will a buy-direct-from-manufacturer system. They also can continue to build what has not been bought by a consumer yet, as they do now, but offer it for sale before and after it was built, without some worthless middleman getting involved.

Quoting FLY2HMO (Reply 13):
That is a valid point, but then again its very different to custom build a PC like Dell does, to build a car.

Most of Dell's PCs are not really custom built these days, but one of several pre-built-standard packages - like cars. Just like, I assume, most cars sold are just configured in one of several popular colors and packages. NO change in factory production need occur.

...and anyway, I'm suggesting moving that direction, not changing everything overnight.

Quoting Asuflyer05 (Reply 15):
And from my experience, customer's love to negotiate for a car.

Car dealers have a horrible reputation for a reason, and unless you have a source that says most people like negotiating with middlemen, I say your claim is false. I say most people believe the car should have a set price for everyone as bought direct from the manufacturer, the middleman, who adds no value whatsoever, is not needed to adjust price.

Cairo


User currently offlinePetertenthije From Netherlands, joined Jul 2001, 3353 posts, RR: 12
Reply 18, posted (5 years 5 months 1 week 5 days 6 hours ago) and read 3132 times:



Quoting WildcatYXU (Reply 3):
Building every single car to a personal order would be way too expensive. Moreover, what would you do with people who have money and would need the car immediately?

Why would it be that expensive? This is the normal way of buying a new car in Europe. And who would need a car immediately? Only someone whose car has crashed or has been stolen, and in those cases you can get the insurance to cover the gap between ordering and delivery. For those that lack the proper insurance, well, they won't be able to afford a new car anyway and will got to secondhand vehicles.

Quoting Bok269 (Reply 5):
Finally the supply chain would be woefully inefficient. Delivering a single car straight from the factory to the consumer would cost a lot more than delivering cars in bulk to the dealer lot.

It would be more efficient. A supply chain is more then just moving goods from A to B. It also involves storage and inventory.

Having thousands of cars standing idle at dealerships across the US means a capital investment that has not paid for itself. When the economy is good it is not that bad, you'll sell them even if it takes a few weeks. But during bad economies you have inventory you can't move, and you are still adding to it. Of course the production line can be stopped to prevent adding even further to the stockpile. But even a stopped production line costs money in the form of (partial-) wages, preventative maintenance, depreciation etc.

Quoting LTBEWR (Reply 11):
Many cars and their parts come from all around the world so it might take months to get it into your dealership. Even final assembly may have to come from Japan or elsewhere meaning months on a boat.

That argument does not hold. A car might come in various trim levels, but the basic components are the same and can therefor be pre-ordered. The body of the car, suspencion, engines are the same or with only limited differences (for instance a few different engine types).

By selling to order you can reasonably predict how many components are required, and buy them well in time for delivery. Besides, from China to Ruesselsheim takes only about a month for a full container, a few days more for a partial container load. For my work I have overseen the transport of ocean containers both import Europe and export Europe for various automotive customers.

Quoting Bok269 (Reply 5):
Thing is a vast majority of buyers don't care that much to spend that much time ordering and waiting for their car to be delivered.

That is the only valid reason not to implement a build-to-order strategy. The mindset of US customers going "I want it and I want it NOW! ".



Attamottamotta!
User currently offlineCairo From , joined Dec 1969, posts, RR:
Reply 19, posted (5 years 5 months 1 week 4 days 10 hours ago) and read 3078 times:



Quoting Petertenthije (Reply 18):
Having thousands of cars standing idle at dealerships across the US means a capital investment that has not paid for itself.

Is there any explanation for why the manufacturers haven't even EXPERIMENTED with buy direct online, except that they have all been in the car industry their whole lives and can't think of any other way to do things other than they way they've always done them?

Quoting Petertenthije (Reply 18):
That is the only valid reason not to implement a build-to-order strategy. The mindset of US customers going "I want it and I want it NOW! ".

That should still be available - the people who want it now will pay noticeably more than those who order direct. They will pay for the staff of the dealer and the dealer owner to make a profit, the storage costs, and the opportunity cost of keeping that big of an asset just sitting uninvested until the buyer shows up.



Cairo


User currently offlineLTBEWR From United States of America, joined Jan 2004, 13040 posts, RR: 12
Reply 20, posted (5 years 5 months 1 week 3 days 22 hours ago) and read 3035 times:

Think of this, in the USA, GM still has over 6000 dealers, Ford over 4000 and Toyota...less than 1500. I am not sure if those number include multi-brand dealerships on one site. GM only sells a few more vehicle than Ford, or Toyota. That means Toyota sells 2 times more vehicles per dealership than the average Ford one. So what does that mean? That the 'big 3' need to eliminate dealerships to a number more like Toyota's, a number more like their real proportion of the market and to assure enough sales per dealership. Perhaps some dealerships could be converted to servicing centers, or sub-dealers, with a very limited number of vehicles in stock, with most at a central facility.
The car makers will also have to stop making so many vehicles on speculation and pushing them onto dealer's lots, forcing higher financing costs.


User currently offlineAsuflyer05 From United States of America, joined Feb 2004, 2371 posts, RR: 3
Reply 21, posted (5 years 5 months 1 week 3 days 22 hours ago) and read 3035 times:

Your argument is based on the idea that because you eliminate the retailer, the cost of cars to the end user will go down. But cars sell for what they're worth, not what the cost to produce them is. Sometimes manufacturers sell cars for less than they produce them for. And sometimes dealers sell them for less than what they buy them for the manufacturer.

User currently offlineJCS17 From United States of America, joined Jun 2001, 8065 posts, RR: 39
Reply 22, posted (5 years 5 months 1 week 3 days 21 hours ago) and read 3026 times:

This hits really close to home for me, as my first job out of college was selling Subarus to corporate clients in Dallas -- which was like selling picture books to the blind. I digress though, I worked out of a dealership because we weren't allowed to work remotely. My last job was working with another automaker in corporate and government sales. However, there were several conclusions I drew about the way the automobile industry works.

Franchising should cease to exist. You wouldn't believe the gross incompetence, unprofessionalism, and negligence that is tolerated at auto retailers. It really is organized chaos at most dealerships. Any of you guys who have bought cars know what I'm talking about to a degree, it's worse when you deal with it first hand through a major client (who is told any number of outrageous things at a franchise) or you simply see what goes on day-to-day. The commission structure must end, car sales should be an hourly or salaried position. Think along the lines of a CarMax. Product and sales training should be done through corporate, not with the hacks who run these joints. Furthermore, management training is virtually nil at 90% of dealerships, they simply promote the guy who sells the most, without regard to actual customer service ability.

It's just an absolutely horrific industry among the franchises because no one knows how tell sell anything. These companies lose so many valuable customers because of horrible salesmanship and equally bad customer service.



America's chickens are coming home to rooooost!
User currently offlineCairo From , joined Dec 1969, posts, RR:
Reply 23, posted (5 years 5 months 1 week 3 days 21 hours ago) and read 3025 times:



Quoting LTBEWR (Reply 20):
Think of this, in the USA, GM still has over 6000 dealers, Ford over 4000 and Toyota...less than 1500.GM only sells a few more vehicle than Ford, or Toyota. That means Toyota sells 2 times more vehicles per dealership than the average Ford one.

Great point - GM has 4 x as many dealers as Toyota and they sell virtually the same amount of vehicles. (GM had about a 1 % lead in the summer of 2008)

Any of you dealer supporters here care to explain how 4 times as many dealers DOES NOT make the car more expensive than it should be or that this is not inefficient?

Quoting LTBEWR (Reply 20):
the 'big 3' need to eliminate dealerships to a number more like Toyota's,

Here's part 2 to your excellent point about the huge number of GM/Ford dealers versus Toyota: GM & Ford sell a much bigger share of their total production to fleets (rental car companies, government agencies), which don't need to go through dealers. About half of Chevy Malibus go to rental car companies and more than half of certain Ford models go to police.....versus a much smaller percentage of Toyotas that go to fleets.

...when you subtract out the huge fleet orders given to GM, my rough estimate is that GM uses 4 x as many dealers as Toyota to sell something like 25% less cars to the general public.

Quoting Asuflyer05 (Reply 21):
Your argument is based on the idea that because you eliminate the retailer, the cost of cars to the end user will go down. But cars sell for what they're worth, not what the cost to produce them is. ...

The pricing rules you are trying to use apply to raw commodities - but not often to costly produced items which would quickly cease to be sold if they sold for less than their cost to produce very often. Cars, like every other produced product in the world, are sold for some amount more than their cost of production, and this cost is less when you take out middleman who add no value to the transaction - like dealers.


Cairo


User currently offlineAsuflyer05 From United States of America, joined Feb 2004, 2371 posts, RR: 3
Reply 24, posted (5 years 5 months 1 week 3 days 21 hours ago) and read 3014 times:



Quoting Cairo (Reply 23):
Any of you dealer supporters here care to explain how 4 times as many dealers DOES NOT make the car more expensive than it should be or that this is not inefficient?

I don't understand how more dealers raises the price of the car? Generally as a manufacturer adds a point to a market, prices decrease.


25 Pyrex : Why is that, exactly? In Europe you routinely need to wait for your new cars - even if you don't need to order it straight from the factory they woul
26 Cairo : Why is toilet paper cheaper at Wal Mart than at the corner store? Both GM and Toyota sell the same amount of cars even though GM has 4 times as many
27 Post contains links Melpax : Interesting that you mention subaru, as a few years ago Subuaru terminated their franchise agreements with their dealers here in Melbourne & set up t
28 LTBEWR : This is another factor about the current USA car dealership model that needs to be changed. You spend hours negotiating for a car, new or used, both
29 Cairo : Amen to everything you say! Dealers are like welfare for a lot of slimeballs who couldn't get jobs anywhere else. (except the mechanics who probably
30 KiwiRob : This is exactly what is done in most countries, in NZ I normally had to wait 6 months for a car to be built and shipped, in Norway I've had to wait 3
31 Asuflyer05 : I'm sure it would violate franchise laws, etc. that prevent manufacturers from conducting direct online sales. But at the end of the day they're manu
32 N801NW : In the late 1990's Ford bought all (or almost) of their dealers in several markets. The only one in remember was Salt Lake City. They dubbed the store
33 Bok269 : I was referring simply to the costs of delivery. Delivering a bunch of single cars to various points is woefully inefficient compared to delivering t
34 Cairo : Trade-ins are only profitable for the dealer's used car business. Besides that, trade-ins are for idiots anyway, since it's the worst possible thing
35 Cpd : Scrap the ridiculous dealer markups on desirable cars - nobody enjoys haggling with a dealer. I can remember seeing photos of Lancer Evo VIII's in th
36 Asuflyer05 : Some of the points you throw out show you don't have much understanding behind retailing products but rather a grudge you are holding from a bad exper
37 Luv2cattlecall : I'm always amazed at how few customers take the option....we saved about $6,400 on our new BMW, plus they bumped the GF and I into J for free. Even a
38 Petertenthije : Trade-ins are very common when buying cars, be it a new car or another second hand. The trade-in is then either put for sale by the garage itself, or
39 Bok269 : I'm concerned with what's feasible. Taking service away from the manufacturers and/or their dealers isn't feasible. Service needs to be in-house to d
40 Cairo : All of you defending the dealer model need to mail your entire income to the government so they can continue to bail out GM since you so wholeheartedl
41 Bok269 : Theoretically, yes, but why would the manufacturer want to do that when it is cheaper and more efficient to do it in house? Not to mention that the m
42 Bill142 : That could work, but as a consumer you loose your negotiating power and the option to trade your old vehicle. There are plenty of kit car manufacture
43 Cairo : You said (reply 39) BEFORE they are able to afford a new car still being in the showroom courted by dealers - this is the scam, very much in the same
44 Bok269 : My post may have been a bit ambiguous, but I certainly didn't say that we should be putting people in cars they can't afford: What I meant was that r
45 Kaboom360 : Hello, Didn't notice any input from the UK, so as a New Car Sales Executive for Ford in the UK, i'll chip in with how it works here..... The Dealer gr
46 Asuflyer05 : Very few banks will finance private party purchases and when they do, the rate is sometimes 3%+ higher. What? Are you serious? My Dell laptop has bee
47 Alfa75 : While we are on the topic. How many of you actually work in the automotive industry? Just curious. Full disclosure...I do.
48 Asuflyer05 : I do. Filler.... ~~ ~
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