NorthstarBoy
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Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 1:27 am

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?
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cairo
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 2:01 am

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
 
prosa
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 2:05 am

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.
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WildcatYXU
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 2:11 am

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?
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cairo
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 2:56 am



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
 
bok269
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 3:23 am



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.).
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ACDC8
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 3:48 am



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.
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N174UA
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 4:13 am



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.
 
ACDC8
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 4:17 am



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
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bok269
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 4:35 am



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.
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ACDC8
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 4:41 am



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.
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ltbewr
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 5:00 am

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.
 
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Revelation
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 5:14 am



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.
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Fly2HMO
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 5:47 am



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.
 
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TheRedBaron
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 6:01 am

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.
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asuflyer05
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 6:13 am



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.
 
pnqiad
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 1:23 pm

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.
 
cairo
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 2:26 pm



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
 
petertenthije
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RE: Is It Time To Change Car Dealership Model?

Thu Feb 19, 2009 6:57 pm



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! ".
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cairo
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RE: Is It Time To Change Car Dealership Model?

Fri Feb 20, 2009 2:41 pm



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
 
ltbewr
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 2:30 am

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.
 
asuflyer05
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 2:30 am

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.
 
jcs17
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 3:42 am

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.
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cairo
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 3:49 am



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
 
asuflyer05
Posts: 2054
Joined: Wed Feb 25, 2004 8:53 am

RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 4:18 am



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.
 
Pyrex
Posts: 4051
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 4:38 am



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

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 would be sitting in a centralized lot (probably ran by the manufacturer himself) waiting for delivery.

Quoting Bok269 (Reply 5):
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.

I remember that a few years ago the ability of car manufacturers to own their own dealerships was severely curtailed, for some reason. Wouldn't be surprised if that was the case as well in the U.S.

Quoting Revelation (Reply 12):
And face it, some people get turned on by seeing row after row of gleaming new cars.

Honestly, thinking that some prospective customer has probably already sat in that shiny "new" red car is a turn-off for me, not a turn-on.

Quoting Asuflyer05 (Reply 15):
Like IKEA?

I think the word you are looking for is "Caterham". Big grin
Read this very carefully, I shall write this only once!
 
cairo
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 4:56 am



Quoting Asuflyer05 (Reply 24):
I don't understand how more dealers raises the price of the car?

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 dealers. In other words, each Toyota dealer is selling 4 x as many Toyotas for every 1 GM car sold at a GM dealer....more volume, cheaper price....its the big box store (Wal Mart) concept applied to cars.

GM is using the equivalent of a bunch of small volume / high priced 7-11s to sell it's cars while Toyota is selling their cars at high volume super-stores.

GM customers are paying for a huge over-bloated, unneeded network of dealers all of whom are expensive to operate, take up a lot of valuable land, have many emloyees, etc....compared to Toyota dealers which are far fewer (thus have fewer employees and all the othe costs) and 4 times as busy.

Quoting Pyrex (Reply 25):
even if you don't need to order it straight from the factory they would be sitting in a centralized lot (probably ran by the manufacturer himself) waiting for delivery.

******great idea****** like one lot per city and maybe a few fairly small showrooms scattered around town...all owned by the manufacturer.

Cairo
 
melpax
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 5:36 am



Quoting JCS17 (Reply 22):

Interesting that you mention subaru, as a few years ago Subuaru terminated their franchise agreements with their dealers here in Melbourne & set up their own dealerships. There was some ruckus at the time as some of the dealers involved were long-standing Subaru dealers who stood to lose most of their business, as Subaru is a very popular brand here. One such dealer re-invented themselves into a VW dealership.

http://www.subarumelbourne.com.au/

Most new cars here are sold to fleets, also 'salary sacrifice' leases are popular as well & are offered by most large corporate & government employers were someone takes up an operating lease on a car for usually 3 years & the lease is paid from their pre-tax income & they only pay tax on their remaining income - this is mainly popular with high-income earners.
Essendon - Whatever it takes......
 
ltbewr
Posts: 12426
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 2:06 pm



Quoting JCS17 (Reply 22):
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,

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 parties in a duel over who wins and usually the customer paying more then they should. Blacks, women and other than non-white males pay more for the car, get less for their trade in or pay higher interest rates in still existing discrimination. Sales persons use high-pressure tactics and bully you in a deal. Most dealerships seem to tack on wacky fees like $200 to process paperwork - it is just a way to make more profit. Each dealership spends $1000's each week in newspaper ads, (probably keeps some of them from ending publishing) filled with big numbers of low prices but loaded with fine print, gimmicks such as '$3000 for anything you can push, pull or drive in for trade in', financing for anyone with a job (but at 25% interest rates), and other anti-consumer lies that should be banned. A significant number of dealerships are being shut down because of proscustition by state and local govenments for a variety of violations of consumer laws or complaints to the manufacturers.
 
cairo
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 3:25 pm



Quoting JCS17 (Reply 22):
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.

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 know their stuff.) What I always find amusing is that your average new car buyer today (at least for some brands) is in their 50s, well paid and often well educated - dealing with bad mouthed, bad mannered, cheesey-dressed salesmen who should be working at JC Penney or Sears - instead they're negotiating 30- 40- & 50 thousand dollar sales. Terrible!

...and the finance guys! and the endless nonsense the finance guys pedal!

Cairo
 
Kiwirob
Posts: 10023
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RE: Is It Time To Change Car Dealership Model?

Sat Feb 21, 2009 6:26 pm



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. 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.

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 months. If you are prepared to wait it isn't a problem, however is the average US car buyer patient enough?
 
asuflyer05
Posts: 2054
Joined: Wed Feb 25, 2004 8:53 am

RE: Is It Time To Change Car Dealership Model?

Sun Feb 22, 2009 5:23 pm



Quoting Cairo (Reply 19):

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?

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 manufacturers. They want to build cars, put them on a train and get paid for it. But I think a lot of it comes from having to support the sale afterwards.

BMW owns BMW of Manhattan and Mercedes-Benz owns Mercedes-Benz of Manhattan. I've never really heard anything spectacular about their sales and service versus most of the franchised stores in the area. And from my experience looking at a 3-series a couple of years ago they certainly weren't dramatically cheaper than any of the other BMW stores in the area.
 
N801NW
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RE: Is It Time To Change Car Dealership Model?

Sun Feb 22, 2009 6:26 pm

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 stores "AutoCollection" and sold the complete line of Ford, Lincoln, Mercury, and Mazda. Several years later they sold them for less than they paid.
 
bok269
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RE: Is It Time To Change Car Dealership Model?

Sun Feb 22, 2009 7:21 pm



Quoting Petertenthije (Reply 18):
It would be more efficient. A supply chain is more then just moving goods from A to B. It also involves storage and inventory.



Quoting Cairo (Reply 17):
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."

I was referring simply to the costs of delivery. Delivering a bunch of single cars to various points is woefully inefficient compared to delivering them to a central dealer. Not to mention, if there is a problem with the car at delivery, it would much more difficult to resolve that issue at a customer's home than at a dealership.

Quoting Cairo (Reply 17):
Who cares. Dealers add no value to the process and purely middlemen.

The manufacturers care. If the model were to change, it needs to make economic sense for the manufacturer. Forgoing trade-ins doesn't make sense for numerous reasons listed above.

Quoting Cairo (Reply 17):
Separate service from sales like every other manufacturer does.

But having service at one central lot would discourage people from servicing their cars at the dealership vs. at a third-party shop. In addition, I'd imagine that customers in for service generates a good amount of showroom traffic.

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 doubt that. GM's issue is that they have 7 brands with their own dealer network selling in many cases similar vehicles. This is where GM's badge engineering is inefficient-while the costs of development and manufacturing of each additional style of a given platform (such as the Chevy Traverse, GMC Acadia, Buick Enclave, and Saturn Outlook) are small, the costs of having a separate infrastructure for each is. This is why GM needs to consolidate brands and dealers.

Quoting Pyrex (Reply 25):
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 would be sitting in a centralized lot (probably ran by the manufacturer himself) waiting for delivery.

It gets back to the need for instant gratification. When many Americans decide to buy a car, they want to go out and bring a car home that same day. I don't know about Europe but in the US, many trade in their cars for something new every 3-5 years. With that in mind, people are willing to settle for something less than perfect if it means they can get a better deal (usually dealers are more willing to negotiate on an in-stock vehicle than one that gets ordered from the factory).
"Reality is wrong, dreams are for real." -Tupac
 
cairo
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RE: Is It Time To Change Car Dealership Model?

Sun Feb 22, 2009 11:11 pm



Quoting Bok269 (Reply 33):
Forgoing trade-ins doesn't make sense for numerous reasons listed above.

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 you can do for yourself. But if it will help move towards direct-from-manufacturer purchasing I'm all for the manufacturers offering what dealers do: 25%+ less than the value of any traded-in-car for anyone dumb enough to sell it at that price.

Any comments from Europe about whether trade-ins are typically part of a new car transaction? I lived in Europe for 3 years but don't think I ever heard of this...

Quoting Bok269 (Reply 33):
But having service at one central lot would discourage people from servicing their cars at the dealership vs. at a third-party shop.

Who cares? Manufacturer's need not be involved in service. Again, I'm talking about what is best for the manufacturer's, while you seem to be talking about what's best for the dealers.

Cairo
 
User avatar
cpd
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RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 12:08 am



Quoting Cairo (Reply 17):
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.

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 the USA at dealers right when they were new and at the height of popularity, the price was outrageous. For the price at some places in the USA, you could almost buy two of them in Australia.

The car dealer experience is usually always dreaded, unless of course you are well known, have lots of money and then the dealers suddenly become your best friend.

In any case, if the dealers are too troublesome, a quick word to the manufacturer usually does the trick.  Smile
 
asuflyer05
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RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 12:25 am

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 experience at a dealership.

Quoting Cairo (Reply 34):
Who cares? Manufacturer's need not be involved in service. Again, I'm talking about what is best for the manufacturer's, while you seem to be talking about what's best for the dealers.

How would not being involved in servicing vehicles be in the best interest of a manufacturer?

Quoting Cairo (Reply 34):
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 you can do for yourself. But if it will help move towards direct-from-manufacturer purchasing I'm all for the manufacturers offering what dealers do: 25%+ less than the value of any traded-in-car for anyone dumb enough to sell it at that price.

Trade ins are very profitable to manufacturers. Especially those that offer CPO programs. And what do you suggest people do with cars they need to sell? Not everyone can sell their cars private party since, not every buyer can pay cash.
 
luv2cattlecall
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RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 12:30 am



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. IIRC very few customers actually opt for this option.



Quoting ACDC8 (Reply 10):
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

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 after hotel/flight/etc was taken into account, we came out ahead financially....not to mention a trip of a lifetime (Europe with your own new car is a whole new experience)!
.
 
petertenthije
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RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 12:58 am



Quoting Cairo (Reply 34):
Any comments from Europe about whether trade-ins are typically part of a new car transaction? I lived in Europe for 3 years but don't think I ever heard of this...

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 sold to a wholesaler. The wholesaler can then sell it to other garages and/or export the car. Shiploads of older cars are send to Africa and Eastern Europe. In some European countries cars above certain ages can be sold to the government for scrapping (Italy, I think Germany as well, the Netherlands are considering it).
Attamottamotta!
 
bok269
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RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 3:25 am



Quoting Cairo (Reply 34):
Who cares? Manufacturer's need not be involved in service. Again, I'm talking about what is best for the manufacturer's, while you seem to be talking about what's best for the dealers.

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 deal with warranties and recalls. Manufacturers do make money off of parts sales and benefit from having the additional foot traffic in the showroom.

Quoting Cairo (Reply 34):
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 you can do for yourself. But if it will help move towards direct-from-manufacturer purchasing I'm all for the manufacturers offering what dealers do: 25%+ less than the value of any traded-in-car for anyone dumb enough to sell it at that price.

But trade-ins save you the hassle (and liability) of having to sell the car on your own. In addition, they allow you to roll the negative equity into your payments.

From a manufacturer's point of view, trade-ins are a great way to get customers in to the showroom before they are able to afford a new car and keep them coming in for service through the CPO program.

Quoting Luv2cattlecall (Reply 37):
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 after hotel/flight/etc was taken into account, we came out ahead financially....not to mention a trip of a lifetime (Europe with your own new car is a whole new experience)!

It always seemed like an awesome experience. Hopefully I'll have the opportunity to take advantage of it one day.
"Reality is wrong, dreams are for real." -Tupac
 
cairo
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RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 4:29 am

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 wholeheartedly believe in and defend the great job they do running their business.

Quoting Asuflyer05 (Reply 36):
How would not being involved in servicing vehicles be in the best interest of a manufacturer?

It just doesn't matter...Boeing rarely services planes, Dell rarely services computers, etc...

Quoting Asuflyer05 (Reply 36):
And what do you suggest people do with cars they need to sell?

Sell them.

CarMax buys any car you can trade in at a dealer without regard to whether you buy one of their cars are not. Also you can sell any car for 20-30% more than the dealer will give you by selling on cars.com; autotrader.com; ebaymotors, etc...

Quoting Asuflyer05 (Reply 36):
Not everyone can sell their cars private party since, not every buyer can pay cash.

Then let the buyers get financing - banks, credit unions, whatever....the financing scam at dealers is part of the problem.

Quoting Bok269 (Reply 39):
Service needs to be in-house to deal with warranties and recalls.

No it doesn't. Independent repair shops can just as easily repair on warranty in the same way the do for insurance - they just bill the manufacturer.

Quoting Bok269 (Reply 39):
(and liability) of having to sell the car on your own.

No liability exists for selling a car on your own.

Quoting Bok269 (Reply 39):
addition, they allow you to roll the negative equity into your payments.

Financing scams - another permutation of the credit meltdown that is, ironically, causing the bankruptcy of US car manufacturers. Car manufacturer's shouldn't be involved in it.

Quoting Bok269 (Reply 39):
in to the showroom before they are able to afford a new car

More financing scams - people who are not able to afford a new car should not be in the showroom and the manufacturer should not be targeting them.

Cairo
 
bok269
Posts: 1568
Joined: Fri May 04, 2007 10:19 am

RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 5:23 am



Quoting Cairo (Reply 40):
No it doesn't. Independent repair shops can just as easily repair on warranty in the same way the do for insurance - they just bill the manufacturer.

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 manufacturer can, in most cases, standardize the tools used, training received, and techniques used by in house technicians better than contracted ones. In addition, they can more easily develop repairs to common problems when they know (and can control) what their shops are capable of, and when said capacity is standardized. In-house shops can more easily participate in helping to develop these fixes.

Quoting Cairo (Reply 40):
No liability exists for selling a car on your own.

That may be true, but I am sure that there is some lawyer out there who could file a lawsuit on behalf of a client who bought a car via a private transaction and then experienced a catastrophic problem, and win or at the very least cause a big headache.

Another issue is that of repairs that may be needed. Most dealers will take a car in any condition, with an expected hit in trade in value. It would be much harder to sell said vehicle privately.

Quoting Cairo (Reply 40):
More financing scams - people who are not able to afford a new car should not be in the showroom and the manufacturer should not be targeting them.

How is hoping that the college graduate who spends $12K on a CPO Civic will come back in three years to buy a new Accord (when he or she can afford it) a scam? And then will get married, have kids, and come back for an Odyssey or Pilot? It's all about getting customers in on the ground floor (where they can afford to be), building brand loyalty, and, as their finances get better, they move up in the brand. It's what Toyota hoped to do with Scion-get customers in the door when they are young, move them up to Toyota and maybe eventually to Lexus.
"Reality is wrong, dreams are for real." -Tupac
 
bill142
Posts: 7853
Joined: Wed Aug 04, 2004 1:50 pm

RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 6:48 am



Quoting Cairo (Reply 1):
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.

That could work, but as a consumer you loose your negotiating power and the option to trade your old vehicle.

Quoting Asuflyer05 (Reply 15):
Like IKEA?

There are plenty of kit car manufacturers out there, but I don't think they include the an allen key
 
cairo
Posts: 889
Joined: Mon Jun 06, 2005 2:41 pm

RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 1:57 pm



Quoting Bok269 (Reply 41):
How is hoping that the college graduate who spends $12K on a CPO Civic will come back in three years to buy a new Accord (when he or she can afford it) a scam?

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 boat as writing sub-prime mortgages. Anyone who has negative equity in their car should not be allowed to wrap the old car's debt into a new car - it's like buying a new bigger house when you owe more on the old house that it's worth, and wrapping it all in one big mortgage...it should be illegal.

Quoting Bill142 (Reply 42):
you loose your negotiating power

There should be one price set by the manufacturer, which should be somewhere near the wholesale price they sell the car to the dealer for. Dealers add no value to the transaction and no one should have to negotiate how much or how little a piece they get to the transaction - they should get nothing.

---
You guys defending manufacturer's vastly inefficient dealer model should volunteer to take on more of the bailout instead of forcing people like me who think they are dinosaurs and hopeless to foot the bill.

Cairo
 
bok269
Posts: 1568
Joined: Fri May 04, 2007 10:19 am

RE: Is It Time To Change Car Dealership Model?

Mon Feb 23, 2009 8:29 pm



Quoting Cairo (Reply 43):
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 boat as writing sub-prime mortgages.

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:

Quoting Bok269 (Reply 39):
From a manufacturer's point of view, trade-ins are a great way to get customers in to the showroom before they are able to afford a new car and keep them coming in for service through the CPO program.

What I meant was that rather than have used car foot traffic going to non-affiliated dealers, manufacturers would rather see that traffic come into their own dealer. In order to do that, you need used cars that such buyers can afford. The hope is that these customers will become better exposed to the brand, and when their means approve come back in to buy a new, more expensive vehicle. You'd also keep them coming for service as well.

Quoting Cairo (Reply 43):
There should be one price set by the manufacturer, which should be somewhere near the wholesale price they sell the car to the dealer for. Dealers add no value to the transaction and no one should have to negotiate how much or how little a piece they get to the transaction - they should get nothing.

Part of me is apt to agree with you, however you can't forget the perceived value factor. Customers are much more likely to buy something if they feel they are getting a deal on it. Building in that extra margin of profit allows dealers to negotiate down, making the customer feel they are getting a bargain on the car. Companies that have tried no-haggle strategies have proven less successful partly for this reason.
"Reality is wrong, dreams are for real." -Tupac
 
kaboom360
Posts: 1
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RE: Is It Time To Change Car Dealership Model?

Tue Feb 24, 2009 12:46 am

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 group I work for are one of the largest by volume in the UK, by this, i mean we don't have the greatest number of dealerships, but we are up there with the big guys in terms of units (cars) registered. We have contracts to supply the UK's biggest daily rental company with cars/ vans, have an above average market share, and have the second largest Motability (a charity scheme to help disabled people obtain a new car to help with getting around) fleet in the UK.

The Group is still family owned, has no major funding by any bank or investment corporation, and at present doesn't even make use of the sizeable overdraft facility. What i'm trying to say is that we are VERY financally stable given the current economic situation.

We currently hold a stock list of around 400 - 700 units (fluctuating), this stocklist is governed by 1 person, who is solely responsible, and answereable to only the Managing Director/ Owner of the Group. The vehicles on this list are carefully chosen, to be current models, with popular choices of engine size/fuel, colours, number of doors, added options etc, along with a few 'oddballs' to satisfy the customers out there who desire something that little bit different.

The list is also kept relevant to the current Ford 'Marketing Programme', the quarterly document circulated by Ford giving the various discounts and customer offers available.

In addition to our stocklist, we have access to Ford's centrally held stock, known as VHC (Vehicle Holding Compound) which is located in Belgium. (Belgium was chosen as most European Fords are built in Spain, Belgium and Germany (and more recently Poland also) which means Belgium is around equally distant to most factories and also central for which ever country sells the car)

Ford's VHC does hold a very large amount of cars, but not as large as you (or any average 'Jo' who tries to buy a car in the UK) would like to think, I'd estimate the number at around 5 - 10 thousand units (Not many when its taken that this stock supplies the entire European market)

If the car a customer desires isn't available from either of these two sources, then a factory build is required. This allows the customer to choose the specification of their car to their exact requirements (Within the parameters of that model line). Factory build usually dictates a 10 - 12 week lead time.

If the customer is a cash buyer, the car is simply sold from stock/ factory ordered upon the payment of a deposit, usually around 300 - 500 GBP. If the customer is a finance buyer, the customer is proposed for finance with the relevant finance provider, only upon acceptance by the finance company is the stock car considered sold/ factory order car actually ordered. A finance customer must complete their paperwork at least two working days prior to collection of their new car, to allow out Group to obtain fully cleared funds from the finance company before the customer takes ownership of their car. This removes the possibility of a customer needing to add more money/ bring the car back as stated in the original posters comments and in reply 1.

Part exchanges are taken readily by UK dealerships, as they usually represent good quality used car stock. However, before being accepted as a part exchange, the car is first appraised by the salesman/ sales manager, and a price is negotiated between these and the current owner (customer). If any finance is owed upon this car, it is deducted from the cars value, any surplus value is used as deposit towards the new purchase, and defecit (or negative equity as it is known here) is added to the new vehicle cost.

A final thing that takes place before a part exchange is accepted is something we have called a HPI (Hire Purcase Index) check. This checks the cars history on various databases (police, insurers, DVLA (the UK equivalent of the US D & V)) for certain things like regestration number change, outstanding finance, change of paint colour, or to notify if the vehicle as been subject to a total loss or 'write off' accident.

I hope this gives an insight into how a UK dealership works, sorry if this turned out to be a lengthy post.

Thanks for listening

Tony
 
asuflyer05
Posts: 2054
Joined: Wed Feb 25, 2004 8:53 am

RE: Is It Time To Change Car Dealership Model?

Tue Feb 24, 2009 12:53 am



Quoting Cairo (Reply 40):
Then let the buyers get financing - banks, credit unions, whatever....the financing scam at dealers is part of the problem.

Very few banks will finance private party purchases and when they do, the rate is sometimes 3%+ higher.

Quoting Cairo (Reply 40):
It just doesn't matter...Boeing rarely services planes, Dell rarely services computers, etc...

What? Are you serious? My Dell laptop has been back to Dell twice for repairs. Boeing has employees all over the country that consult with airline manufacturer mechanics. Embraer, Cessna, Bombardier all have service facilities for their owners through out the United States.

Service departments are single handedly the most important part of a dealership and manufacturer. It gives the manufacturer way more control over a customer's experience with the brand. A customer may purchase a car every 5 years and but pop into service 3-4 times a year for oil changes, repairs, etc.
 
alfa75
Posts: 488
Joined: Mon May 16, 2005 11:27 am

RE: Is It Time To Change Car Dealership Model?

Tue Mar 03, 2009 2:15 am

While we are on the topic. How many of you actually work in the automotive industry?

Just curious.


Full disclosure...I do.
The best things in life aren't things!
 
asuflyer05
Posts: 2054
Joined: Wed Feb 25, 2004 8:53 am

RE: Is It Time To Change Car Dealership Model?

Tue Mar 03, 2009 3:34 am

I do.

Filler.... ~~ ~

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