3 ms·

> I'm not really sure what the point of car dealers is From a DOJ analysis: > Auto production is a capital-intensive business and a franchise system allowed m

> I'm not really sure what the point of car dealers is From a DOJ analysis: > Auto production is a capital-intensive business and a franchise system allowed manufacturers to concentrate their resources upstream while accessing capital through franchise fees from independent entrepreneurs at the retail level. Given capital availability and resources at the time, it made sense for the auto makers to franchise. https://www.justice.gov/atr/economic-effects-state-bans-direct-manufacturer-sales-car-buyers https://www.justice.gov/atr/economic-effects-state-bans-dire...

whamlastxmas 10y ago
Not sure why you're downvoted. This is the first rational explanation for this I've ever seen - thanks. Doesn't really justify it still existing today, but makes me hate the system a little less.
- TAForObvReasons 10y ago
  I'm not surprised, anything that doesn't toe the Musk/Tesla line is usually met with downvotes here (already -3).
  - whamlastxmas 10y ago
    Musk is pretty divisive here to be honest. I see tons of anti Musk comments. I assume from your tone you aren't a fan of his, so I think what we're both seeing is confirmation bias that everyone is against our opinions.
    - deleted 10y ago
      [deleted]
mikeash 10y ago
If that were true, then they wouldn't need laws forbidding manufacturers from selling directly. Dealers love to tell us how useful they are, but then they turn around and lobby for their privileged position to be enshrined in law and enforced by the government. Does not compute.
fma 10y ago
It's a rationale explanation and I see a part of it. It's not like McDonalds, where they have a corporate owned store and a franchisee store. Any price difference would be measured in nickels and no one is going to drive to the other side of the city to buy a burger. But if a corporate dealer can knock off $1,000 on a car just because there is no middle man, I can see why no one would want to franchise a dealership. It's stuck between a rock and a hard place.
vinay427 10y ago
Thank you for responding to my confusion with this excellent article. It is intriguing to me that increased information on pricing and availability through the Internet has already eroded some of the benefits of dealership regulation. Perhaps they are a dying breed even with protective regulation that at least in the past proved mutually beneficial for automakers and dealerships.
- deleted 10y ago
  [deleted]

whamlastxmas 10y ago

Not sure why you're downvoted. This is the first rational explanation for this I've ever seen - thanks. Doesn't really justify it still existing today, but makes me hate the system a little less.

TAForObvReasons 10y ago
I'm not surprised, anything that doesn't toe the Musk/Tesla line is usually met with downvotes here (already -3).
- whamlastxmas 10y ago
  Musk is pretty divisive here to be honest. I see tons of anti Musk comments. I assume from your tone you aren't a fan of his, so I think what we're both seeing is confirmation bias that everyone is against our opinions.
  - deleted 10y ago
    [deleted]

mikeash 10y ago

If that were true, then they wouldn't need laws forbidding manufacturers from selling directly. Dealers love to tell us how useful they are, but then they turn around and lobby for their privileged position to be enshrined in law and enforced by the government. Does not compute.

fma 10y ago

It's a rationale explanation and I see a part of it. It's not like McDonalds, where they have a corporate owned store and a franchisee store. Any price difference would be measured in nickels and no one is going to drive to the other side of the city to buy a burger. But if a corporate dealer can knock off $1,000 on a car just because there is no middle man, I can see why no one would want to franchise a dealership. It's stuck between a rock and a hard place.

vinay427 10y ago

Thank you for responding to my confusion with this excellent article. It is intriguing to me that increased information on pricing and availability through the Internet has already eroded some of the benefits of dealership regulation. Perhaps they are a dying breed even with protective regulation that at least in the past proved mutually beneficial for automakers and dealerships.

deleted 10y ago
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