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The only real consumer benefit that this article describes for factory-direct sales is cost savings from no longer carrying inventory. But that's a completely

The only real consumer benefit that this article describes for factory-direct sales is cost savings from no longer carrying inventory. But that's a completely separate issue: there's no reason an indy dealer can't have a low inventory and custom-order new cars for all their customers. Dealers carry a large inventory because it works. People (for the most part) want to pick out their specific car and drive it off the lot. They form an emotional connection with the car before they own it, and the dealer needs that emotional connection to close the deal. Going factory-direct with a wait time of several days would snap buyers back into logical reality, and car companies do not want that.

gruez 11y ago
what about the commission the dealer makes off each sale?
nickff 11y ago
If car companies "do not want" to sell direct, why did the dealers in so many states lobby for laws which guarantee that the manufacturers cannot sell directly to consumers?
- strommen 11y ago
  The laws are typically guaranteeing that manufacturers cannot sell directly in places where they also have dealers. Because a regional car dealer with $X0 million of revenue cannot compete with a multinational car manufacturer with $X0 billion of revenue. Any time a manufacturer didn't want a particular dealer around anymore, they could simply drop their prices and drive them out of business. That's not a healthy dynamic for a business relationship. One could argue - and I agree - that the best way to handle this is via the free market, and let manufacturers who do this sort of thing gradually lose their distribution network due to lack of trust. But the short-term collateral damage is high-profile bankruptcies, unemployment, and high auto prices.
gutnor 11y ago
It is interesting that in Europe, buying a car means going to the factory-franchised dealer, order and wait several months to get your car. The only car I bought new took 6 months to be delivered and that car model had existed for over 2 year before I ordered it, so it was not a new or recently refreshed car. When you buy a show-room car, or an in-stock car (km 0 car), you expect a significant discount (10 -> 20% off) over the discount you generally expect (i.e. not much nowadays except maybe free metal paint or free alloy wheels upgrade) There are few generalist dealer that do multi-brand dealer where you buy in stock car. The interest to go to those dealers is that they indeed have the car in stock and generally with a good discount over the factory-direct sales, or provide configuration that are not available in your country[1]. [1] Factories provide different pack and dependencies between options is different EU countries. For example, a car I was looking at requires luxury electric seats in order to install 360 camera in Belgium. It is available as a standalone option in Spain on most trims, but is restricted to the most expensive trim in the UK. The EU is weird like that.

gruez 11y ago

what about the commission the dealer makes off each sale?

nickff 11y ago

If car companies "do not want" to sell direct, why did the dealers in so many states lobby for laws which guarantee that the manufacturers cannot sell directly to consumers?

strommen 11y ago
The laws are typically guaranteeing that manufacturers cannot sell directly in places where they also have dealers. Because a regional car dealer with $X0 million of revenue cannot compete with a multinational car manufacturer with $X0 billion of revenue. Any time a manufacturer didn't want a particular dealer around anymore, they could simply drop their prices and drive them out of business. That's not a healthy dynamic for a business relationship. One could argue - and I agree - that the best way to handle this is via the free market, and let manufacturers who do this sort of thing gradually lose their distribution network due to lack of trust. But the short-term collateral damage is high-profile bankruptcies, unemployment, and high auto prices.

gutnor 11y ago

It is interesting that in Europe, buying a car means going to the factory-franchised dealer, order and wait several months to get your car. The only car I bought new took 6 months to be delivered and that car model had existed for over 2 year before I ordered it, so it was not a new or recently refreshed car. When you buy a show-room car, or an in-stock car (km 0 car), you expect a significant discount (10 -> 20% off) over the discount you generally expect (i.e. not much nowadays except maybe free metal paint or free alloy wheels upgrade) There are few generalist dealer that do multi-brand dealer where you buy in stock car. The interest to go to those dealers is that they indeed have the car in stock and generally with a good discount over the factory-direct sales, or provide configuration that are not available in your country[1]. [1] Factories provide different pack and dependencies between options is different EU countries. For example, a car I was looking at requires luxury electric seats in order to install 360 camera in Belgium. It is available as a standalone option in Spain on most trims, but is restricted to the most expensive trim in the UK. The EU is weird like that.