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Why do manufacturers feel like they must always have dealers? Why don't they ditch the dealers and sell directly?
by craftyguy 8y ago
Why do manufacturers feel like they must always have dealers? Why don't they ditch the dealers and sell directly?
- prostoalex 8y agoWall Street historically has preferred manufacturers to concentrate on R&D and manufacturing. Manufacturers with large offline presence would have inflated staff numbers, higher labor costs, massive real estate presence and are harder to operate in case of a downturn. Having some well-resourced locals willing to take up those risks seemed like a win-win at the time.
- craftyguy 8y agoI can understand why we got here, but I don't understand why there are any reasons why we must stay, other than to keep dealers in business. You don't need a real estate agent to buy a home. Do they make it easier for some folks? Yes, but you definitely pay for that convenience. You always have the option of doing it yourself (again, which saves a lot of money). Buying a car should be the same way. If you need help selecting a car (or whatever it is that dealers do), pay extra for the service. For everyone else, buying direct from the manufacturer makes more sense.
- prostoalex 8y agoI'd imagine the "selling" operation of the dealership is insignificant, at least the new cars department. Trade-ins, used cars, service and maintenance are the margin drivers. If you go through TrueCar, or any of their white-labeled sites (Costco Auto, Amex Cars, Overstock Cars), you're more or less buying direct.
- JumpCrisscross 8y ago> Why don't they ditch the dealers and sell directly? This is illegal in many states.
- monkmartinez 8y agoWhy? I mean... can we not change that?
- citizenkeen 8y agoWe could, but dealers spend a lot of money lobbying to make sure we don't.
- davidhyde 8y agohttps://en.wikipedia.org/wiki/Lobbying_in_the_United_States https://en.wikipedia.org/wiki/Lobbying_in_the_United_States It can be changed but that costs money: To change the law via lobbying or by challenging the law in court.
- JetSpiegel 8y agoIn the US? Good luck out-lobbying GM, Ford, etc.
- notatoad 8y agoThe point here is that they are out-lobbying Ford and GM. The car companies want to sell direct to consumer, and the dealers have managed to maintain their role as government-mandated middlemen despite that.
- bluGill 8y agoIs that true? We know the car companies cannot sell direct, but would they if they could? Dealers are required to have trained mechanics who actually know to deal with the car.
- koolba 8y agoBecause elected officials at the State level receives contributions from dealers in exchange for doing their bidding. The “pro” argument for it is that it keeps more money intra State rather than sending it upstream to the parent company’s home country / State. The con is that you’re shafting consumers and eliminating true competition.
- dantheman 8y agoRelatively dumb laws that require dealers: https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes
- greglindahl 8y agoExisting manufacturers have signed contracts with their dealers that say they must sell through them. Because of shenanigans in the past, these contracts are supported by special laws, which basically make it impossible to end them.
- takk309 8y agoPersonally, I would much rather purchase a vehicle through a dealer so that if and when I do need service or repair work done I can just use the dealer. I have read far too many Tesla repair horror stories.
- craftyguy 8y agoDon't assume that bad stories about one manufacturer would automatically apply to all manufacturers.
- jandrese 8y ago> Why don't they ditch the dealers and sell directly? Because local dealerships are well connected politically.