4 ms·

I think the idea there was supposed to be that if no "negotiation" occurred for most sales (either dealerships reformed or they were replaced with direct manufa

I think the idea there was supposed to be that if no "negotiation" occurred for most sales (either dealerships reformed or they were replaced with direct manufacturer sales) and everyone paid "sticker price", then manufacturers would start to compete more on price, thus reducing the overall price and margins of vehicles in the long run. Also, how come you didn't drive out if the dealer with your new vehicle that same day?

shostack 10y ago
Exactly. There is little incentive for them to compete on price when they can instead play games with it due to information asymmetry and sales tactics.
- linuxhansl 10y ago
  A friend of mine does this when he needs a new car: He goes to 3 dealerships in this vicinity, tells them exactly what car he wants to buy with the exact extras, asks them for their best price, and let's each know he's going to two other dealerships. Then he leaves his phone number and walks out. Has worked the few times he did it so far.
  - seanp2k2 10y ago
    The thing is, dealerships have incentive to keep dealerships in general in business, and they likely all know each other, so they probably won't undercut each other by a large margin. Since they all know the actual cost of the thing you're wanting to buy, dealership A gives you a price maybe a few hundred below dealership B even though it's a few thousand above what their actual cost is. Consider how much prime real estate dealerships sit on, how many employees they have, and how many units they sell per day which must pay for the aforementioned items with their mark-up, and still turn a profit at the end of the day. Now consider how much less expensive every car would be if they didn't have those additional costs, and consider if the benefits a dealer adds are worth those costs. IMO factory-direct sales can't come soon enough.

shostack 10y ago

Exactly. There is little incentive for them to compete on price when they can instead play games with it due to information asymmetry and sales tactics.

linuxhansl 10y ago
A friend of mine does this when he needs a new car: He goes to 3 dealerships in this vicinity, tells them exactly what car he wants to buy with the exact extras, asks them for their best price, and let's each know he's going to two other dealerships. Then he leaves his phone number and walks out. Has worked the few times he did it so far.
- seanp2k2 10y ago
  The thing is, dealerships have incentive to keep dealerships in general in business, and they likely all know each other, so they probably won't undercut each other by a large margin. Since they all know the actual cost of the thing you're wanting to buy, dealership A gives you a price maybe a few hundred below dealership B even though it's a few thousand above what their actual cost is. Consider how much prime real estate dealerships sit on, how many employees they have, and how many units they sell per day which must pay for the aforementioned items with their mark-up, and still turn a profit at the end of the day. Now consider how much less expensive every car would be if they didn't have those additional costs, and consider if the benefits a dealer adds are worth those costs. IMO factory-direct sales can't come soon enough.